Casebook PBC Revenue, Valuation & Funding (2024)

hey folks my guest today is tristan luis he's a serial entrepreneur who's built and taken five technology companies from idea to exit he also served as the global chief innovation officer for hsbc and global head of mobile internet for deutsche bank his writing has appeared in the new york times forbes and many other publications he currently serves as president and ceo of casebook pbc a government technology software company tristan you're ready to take us to the top sure absolutely i mean a pleasure meeting you a pleasure meeting you so i have to ask you real quick about that your a time at hsbc what years were you there when did you leave uh so i was at hsbc from 2001 to 2008. um interesting time in the sense that when i joined the company did not even own the name hsbc.com on the internet i actually had to go and purchase that from the holland school boy choir and built up basically all of their internet infrastructure over that uh seven-year period when did you do any sas debt at that time or was it too early it was way too early at that point really just getting people um organized around the concept of apis and uh you know hosting things outside of big data centers was a little early now at deutsche bank i'm going to show you some of that so very cool okay tell us about casebook what's the company doing how you guys making money look um interesting problem space that we started identifying is the human services space so human services what people generally think of as social services so uh child welfare juvenile justice um domestic violence which is like sexual abuse or domestic abuse um anti-recidivism which is generally people getting out of jail those types of programs and what we've identified is that it's a huge huge space um 24 billion dollars is spent on software and that's based by the us government in um state and county's level and yet there isn't a platform for this particular space as uh as we've grown we've also identified that there were um there was an adjacent portion of what we're doing so we've shifted a little bit from just being a purely government-focused organization to also servicing the nonprofit sector because there's about 40 000 human services organization that employs 3.2 million people in the country and deliver services to one in five americans so tristan who are you selling to governments we're selling to both non-profits and government agencies in that space because what we've identified is that the size of the problems that they have is very similar the type of problems are very similar and the type of data that they need to handle is very similar and the enemy that they've got or the the competition that we're dealing with is very similar it's pen and paper so what are they paying what are they paying on average per month to use the technology um so on average per month it depends on the size of the team what we've done is that we've created a product that has just like every other science company three different products here at uh 29 49 and uh 69 uh and depending on the features that they're using the 29 dollars is organized really as a weight well hold on sorry before we before we go deep on all of what's the average first the average is about 49 maybe 50 you call it 50. okay 50 per seat or per company per night per seat and generally we're looking at uh our average customer has about 15 to 20 seats so yeah still relatively small numbers it's uh the law of aggregating a lot of small numbers which is why we need to find a market that had a lot of actors in it per month on average 20 seats on average each comp non-profit or government's paying about a thousand bucks a month about a thousand bucks a month but most of our contracts send to me 24 months contracts so they're actually you know it's nice from a retention standpoint and from insurance standpoint because we don't have to worry quite as much about uh controlling churn amongst months basis is your net revenue retention above 100 percent way way i mean i think uh networking retention yeah i mean year on year our gross is uh probably 50x 60x but remember again a lot of small numbers where we've been in the market only a couple of years it's a second year in the market uh and our revenue retention is yeah well over 100 percent we actually i don't like to talk about churn that much because our turn numbers are ridiculously low in that we've had one customer turnout and that was because the organization we were dealing with actually ran out of money and so it couldn't pay us but turn doesn't make sense for you you were founded in 2019 so two years ago but your contract minimums are two years so yeah there hasn't had there hasn't been a chance for people there's a chance for people to churn yeah yeah is the opposite true there hasn't been a chance for people to upgrade yet how do you get people so actually when you're on a two-year contract that's actually kind of the interesting thing is that the opposite has not turned out to be true initially our initial assumption was that the your average customer was going to be there and then we would when contractor negotiation came up we would start increasing the number of seats but what we've seen is that actually a number of our customers are now asking us how do we go about increasing seats on top of the contract that we already have and how many customers are you working with today uh you know low hundreds is uh really what we're seeing time in terms of our logos gotta call like 200 something like that yeah okay and did you guys bootstrap this or you decided to raise so it's one of those crazy thing where we neither decided to raise no but strapped it uh it has to go to the foundational story of the company where we found a foundation in ekc foundation which is one of the biggest child welfare foundation and they needed to get a sense of how many children were in the child welfare system um along the way they ended up developing some technology that kept um managing systems for uh one state and so they were like well can you take this contract from us we turned that contract into a profitable contract and we've been basically bootstrapping off that profitable contract to help us build out a so you have not raised external capital today we have not really raised any external capital to speak up we're actually about to go into market right now to raise just a small round what's a small round how much six six to eight million dollars okay and what valuation do you think you'll be able to raise on uh i'm trying to keep it uh tight right now so i figured you know based on where the market is sitting and on numbers that we're doing and figuring something in the 16 to 20 million dollar range the reason is that that system free money or post uh that's going to be uh in the post money got it so you raise it like a 14 pre race 6 million for 20 years exactly interesting um the reason is that you know my view is that we have a fairly large ramp i don't want to signal a very high valuation at this early stage in the game because i'm looking at eventually raising other rounds further down the road well 200 customers at a thousand dollar rp we just talked about 50 bucks a month 20 seats on average that puts you like 200 000 a month in revenue is that about right that's about right yeah and where were you one year ago uh one year ago we were at uh uh we were at 50 000 in arr last year so just give you to give you a sense of how big the ramp has been this year it's been a pretty incredible year oh so i don't know what 50 000 an ar means because i don't know what month you're multiplying what but like in december of last year what was your mrr so our mr in december of last year was sitting around eleven thousand dollars okay got it so yeah you've weighed more than 10x which is great where's the growth coming from why why so fast so a number of things um one is we've identified the right uh product market fit this year we've identified the right markets um to target we've also noticed that there really wasn't that much competition for what we were doing the interesting thing is that the market's mostly dominated by system integrators there hasn't been a software package that's really doing what we're doing we've also priced it right and maybe even priced it low but that was by design i wanted to make sure that from an operational standpoint we could operate at the lowest possible price point in the market so that it would be very difficult for any competitor to come in and come in and underprice us there's always room to you know grow our pools uh from a low point but there's very few opportunities to lower our pools when uh when you're in a particular market so it was really key to what we were building to make sure that we could operate at a profit on a very large level are you profitable today we are not profitable because we're still investing in r d but our burn rate is in the very very low six figures i mean i'd say what i'm saying very low six figures is that on a high on a high spend months i'll probably be breaking 100 120 thousand dollars but usually we tend to sit below that that's that's net burn or gross that's net burn got it so after that means if you add back 200 000 of revenue to 120 000 and burn your total expenses monthly or 320 000 dollars no uh because remember that i mentioned that we're working off the back of a large uh system integration contracts that uh we've been using to fund this so really our total burn if you were to take out that contract is sitting closer to six seven hundred thousand dollars monthly monthly how big was that contract and what year was that closed in that contract was a uh seven million dollar contract and that was uh closed in 2010 2011. we still had uh another year plus on it and so we're basically using it as our outside investor from our send point right is that we've been working on building a sas business and growing a sas business on the back of a uh a very very lucrative contract this so the story is getting a little loose here so i need to ask questions to tighten it up right so that was launched in 2010 you guys were launched in 2019 so you basically picked up that contract four or five years in okay and how much of the seven million contract is now being up are you applying to the 200 000 a month revenue dollar figure you just told me about oh so that's zero i mean uh got it so you're doing 200 000 a month in revenue that has nothing to do with the seven million dollar contract exactly yeah okay got it and you're spending 650 000 a month on all the base right now basically using that contract yeah fund the difference you got it where that's a that's a lot of money to be spending for a company that's at a 2.4 million run rate where is that money being spent that money is being spent on a substantial amount of r d because uh we what we've identified is that we've identified a 12 to 24 billion dollar opportunity that's largely greenfield and how many engineers though i mean can you quantify the r d speed uh so we've got 36 people in the organization i've got six in sales everything else is in product management and um engineering so i'd say call it 20 plus i mean i could give you the exact number but uh 20 plus engineer and product managers and then the rest is um customer success and sales we're actually a relatively young stage in terms of building our sales infrastructure our sales team is relatively new and uh we keep hiring on that it's just it's still hybrid with right with 36 people and 650 000 a month and burn you're burning like almost 20 thousand dollars and burn per employee i mean that's a lot for a startup that is a fair amount for a startup what what happens when the contract stops i mean you really have to go raise this equity round otherwise you have to cut your burn a lot absolutely yeah yeah and that's exactly why we're looking at um at raising some money right now because it's going to take us another couple of years to get to the point where we're filling that gap yeah are you 100 under the business today yeah got it you don't know okay so so how did you i mean imagine a lot of people were fighting to take over the 7 million contract how did you get it uh it's a weird weird type of story 2016 the election has happened i'm on the losing side of it i'm trying to figure out how do i get involved with technology that actually can have a positive impact on the world instead of the previous startups that i've built uh and i get connected to this foundation and they're like we don't know what to do with this uh they've got a largely unprofitable contract at the time because it's not being managed like a software management contract and so i started looking at that i started looking at the space and was surprised that there were a number of dynamics in the space that were interesting one was that there really weren't any standardized software packages to address some of the problems that were there two was that there was a tremendous amount of money that was flowing into that space two system integrators and so i figured okay let's take those contracts let's right-size them in terms of how you're servicing them and then let's leverage the revenue that is generated by the profit that is thrown off from there to actually build a proper sas package that makes a lot of sense let's wrap up your tristan with the famous five we're out of time number one favorite book favorite book on leadership um it's a history book about five different presidents that um are stuck at a particular moment of crisis and how they went through that physical crisis number two is there a ceo you're following or studying he's a republican following and slaying satya nadella is probably one of the most interesting ceos right now in terms of what is between microsoft and how it's transformed no number three what's your favorite online tool for building a business favorite online tool for building a business hubspot i pretty much live and die by the numbers still sitting in there number four how many hours i sleep to get every night eight i try to make sure that you know it's really important to me and situation married single kids uh married one kid uh that's great how old are you just turned 50 this year uh happy birthday and well not today but uh yeah earlier this year and uh so that's why the eight hours of sleep i mean right take ten years ago and it was four yep and take us home here something you wish you knew when you were 20. something i wish i knew when i was 20 uh that uh you spent too much time in your head you should really focus on the problems that you've got in front of you and on what you can actually impact guys casebook.net founded two years ago on the back of a big professional services contract now they're pure sas 200 customers paying on average a thousand dollars a month 2.4 million bucks in terms of run rate up from just 132 000 bucks in terms of run rate in december of last year incredible growth raising 6 million on a 14 million pre-right now we'll see if tristan can get it done as he looks to scale with his team of 36 to support these governments and non-profit organizations tristan thanks for taking us to the top a pleasure 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 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 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 the big red button and then click the 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