Chimney Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Ryan Salerno. He's a CTO and one of the three co founders of Chimney. Before Chimney, he was a self employed developer building a variety of projects, scheming to turn one of them into a viable recurring revenue earning business. He also taught coding classes at General Assembly and before that worked at news grid where he met his wife and co founders. Alright, Ryan, you ready to take us to the top? [00:18] >> Let's do it. [00:19] Alright. So what is Chimney? What are people paying you for? [00:23] >> So we launched so we have two products. The first product we launched with our financial calculators that are embedded on bank websites. So when people have questions like how much home can I afford? Should I rent or should I buy? What are my retirement savings going to be? We have calculators that go on bank websites that help answer those questions. So that was the first product that we launched with. And now after working with maybe 60 [00:49] >> different financial institutions, then looking at the data, the data was screaming at us: mortgage, mortgage, mortgage, mortgage. And so now we're building a new tool for homeowners, existing homeowners, so they can track things like, how much home equity do I have? Can I click one button to tap into that home equity? Do I have expensive credit card debt that I can eliminate with home equity? Things like that. [01:14] Mhmm. And so how do you make that sticky? I mean, most people thinking about, like, their credit card bills or home equity, they do it, once and then they they don't come back. Right? Or how do you make them engaged? [01:23] >> Yeah. Good question. And that's a that's a big question that we're trying to answer ourselves. And the strategy is nothing new or secret. Notifications and emails and, ideally having the app embedded within another app that they do use, like on a, at some frequency, at a monthly basis or something. [01:44] Mhmm. So is that your main use case is you're selling the ability to embed this calculator to insurance companies? [01:51] >> Yeah. So this, this is a new product that is not in market yet. And the idea here is to partner with a big bank that already has millions of users and they also serve up HELOCs or other types of loans. And then we'll be the tech in the middle that engages the users and encourages them to open up some of these products through the bank. [02:15] Mhmm. Now you have pricing plans ranging from $44 a month to enterprise. What's the average customer pay per month? [02:23] >> Per year, it's like 7,000 per year for the calculators. Oh, okay. Yeah. [02:28] Interesting. And what are you upselling against? Is it like number of hits the calculator gets per month or something? [02:34] >> Pricing's really simple. So it's just number of calculators. So the average price is $99 per month per calculator. [02:43] 99 per month per calculator. Okay. Interesting. Very cool. And then I guess put this on a timeline for me. When'd you guys launch? [02:50] >> So we launched the calculator product in 2020. [02:54] What about the whole business though? Or was that the business that was launched? [02:57] >> Was, yeah, that was the launch. So before that it was nights and weekends and we didn't have any customers yet. And so [03:05] >> it was a long time. It was actually, we did, we kind of, in my opinion, went about it the right way. So before we ever made a serious investment in terms of time or money, we made sure that this was like a viable thing to do. Like So we went out and we asked for, we told people like, Hey, you have existing calculators, but they don't look great. If we give you calculators that look better, would [03:30] >> you pay us for it? And the answer ended up being yes for like two or three different banks. And so then, we went and built it and sold custom calculators to those banks. And now we have money coming in and now we can sort of justify building out the rest of that library and building in all the other features that would make it an actual SaaS business. [03:53] 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 [04:16] 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 [04:40] 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 [05:02] 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 three point seven 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. [05:27] Maybe you're 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 [05:49] second, but 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 [06:16] back into the interview. Interesting. And so how many customers like those first three banks are you now serving today? [06:23] 60 plus. 60. Okay. Wow. And so you're obviously a CTO engineer. You had two other co founders. Did you guys say, you know what? We're just gonna do thirty, thirty, 30 at the start to split it evenly or was it different? [06:35] >> That was different because I don't like that. I don't think if there's two people, it shouldn't be fifty, fifty. What if you disagree? So we're forty, thirty, 30. The CEO, Kobe, it was his idea. So he has 40% and then Chase and I are each 30. [06:52] I'm so I've never again, I've recorded almost through this interview. I've never had a founder just admit that, but it's so true. Anytime I see someone split fifty fifty, I go, you probably don't have great communication with your co founder. You avoided the conversation basically, is what happened. [07:04] >> They avoided the conversation. What if what if they they both, like, truly believe something and now they're kind of screwed? Like, how do you make that decision? [07:13] Yep. That's right. So you guys are forty, thirty, 30, which is I think that's great. Now have you guys bootstrapped or did you raise capital? [07:20] >> Yeah. So I was pretty adamant about bootstrap, bootstrap, bootstrap for a long time. And so we made it to about 300 ks in revenues by being fully bootstrapped. [07:35] >> So in 2020, when we were locked down, we were able to do it because we were working from home. I literally don't tell anyone, had two computers working on one thing and the other thing. And that was sort of what enabled us to be able to be Bootstrap for longer. And then in December of last year in '21, we took a small seed round. [08:00] Okay. And how much was that for? [08:02] >> That was for 1,300,000. [08:04] And and so what did you use that money on? Why'd you need it? [08:07] >> Hire a a team in house. We had the three co founders and we had all of these different agencies. We had a marketing agency and we had a development agency and a sales company that was doing outbound reach. And the first hires went for a few key internal people, a couple of developers, a designer, and somebody to help with admin stuff. [08:31] What's the URL of the developer agency that you used? [08:35] >> It is brights.io. Brights? They Brights. Yeah. So they were located in Kiev, Ukraine. And so they've been unavailable. Everyone is safe and we've been in touch with them, but not able to work. [08:52] Yeah. I see it. I'm on their site now. You know, I guess two things here. One, obviously, we're really glad they're safe, but this is also like for early founders, this is totally what I recommend. It's an outsourced dev shop and outsourced sales. Like, no fixed expenses until you have some traction. So these guys did a good job for you, sounds like. [09:09] >> They did. Yeah. And the other thing that I would recommend is because I've heard a lot of people having bad experiences with outsourced dev shops because what they get back is slightly off from what they wanted. And so the joke is that you have to be able to build it yourself in order to have an outsourced dev shop. So I'm giving them literally like the database schema and the relationships and the models and like, okay, here's [09:37] >> how we should structure this. Here's the architecture. And then they go and fill it all in. And that worked really, really well for a long time. [09:43] If you if you work with sort of a reputable development shop like the one you work with, then you get back in bad product. It's usually because you gave terrible specs. It's very rarely the developers you know, it's very rarely the shop's fault in my opinion. [09:56] >> Yeah. [09:56] So what'd you pay those guys to sort of get you from nothing to MVP stage? [10:01] >> Nothing. I actually remember this because this was the first money that we spent. From nothing to MVP was $16,000. And this was a platform for people to log in, create the calculator, issue it to themselves, and then embed it to their website. [10:15] Okay. That's great. [10:17] >> No, no Stripe integration, no nothing. This was like the, the, it actually working, but like really minimal, but it was viable. [10:26] That's great. Okay. So that's the dev agency. Who was the sales company you used for your first outbound campaigns? [10:32] >> They're called Memory Blue. [10:34] Memory Blue. Were they good? [10:36] >> Yeah. And I was less involved with them in the day to day, but they were good because what they did was we had one, there's three of us. And now all of a sudden we have a pipeline and we have [10:49] >> people that are like doing outbound reach all the time and meetings like flowing to us. And so that worked well for a while as well. [10:58] Mhmm. I mean, I'm seeing they have over 300 outsource like SDRs on their team. This is also what I recommend. This way you don't have to teach an SDR yourself. You don't have to pay for their Salesforce instance. Like, these firms take so much fixed expenses off of start up sheet. Now, then you raise capital, you wanna bring it all in house, which makes sense. So what's full time team today? [11:17] >> Today, we have three developers. We have designer. We have like an admin person that helps with billing and like website maintenance and all sorts of stuff. We have one seller and that's it. And then the three co founders. So then one position that is excluded from that is product. We did not hire for we were considering it, but ultimately decided the small team of like eight or nine people who can't yet have a product manager, like [11:48] >> our CEO needs to be the product manager for now. [11:51] Yeah. Yeah. Okay. So nine folks, three engineers, one sales rep, CEOs doing product engineering. And then obviously you want to be smart with how you spend the money because dilution is a real thing. So when you guys raised the 1.3, I mean, was that at like a 4 or 5,000,000 valuation, something like that? [12:03] >> It was 7,000,000 valuation cap on a safe note. And that is yeah. Post money. [12:11] Yeah. That's great. I mean, so that's super effective. And just to be clear, 60 customers at $7,000 ACV, you guys are doing about $35,000 a month right now in revenue? [12:21] >> Sounds right. Yeah. Something like that. [12:22] Okay. What is that up from from a year ago? [12:27] >> It's up from so it's not up as much as you would think because we had this calculator business and instead of doubling down on the calculator business and like selling more calculators, we've decided that we're gonna launch the second product that sort of like augments the calculator business. And so for that reason, and we haven't seen like triple sales growth. [12:51] I mean, said earlier you did about 300 ks when you raised. So you're doing like $28,000 a month in rev, $25,000 a month in revenue about a year ago. [12:59] >> Yeah. So we've had, yeah, it's been a little bit chunkier than we might like. But we just finished the ICBA Think Tech Accelerator, which is like the independent bank and credit union organization. And so that was great because it's less of an accelerator and more of a rapid fire way to have four meetings per day with banks and credit unions every day for three months. And so now our pipeline is juicy from that. [13:31] What was the name of that? What was the name of that accelerator? [13:34] >> I ICBA, ThinkTech. [13:37] ThinkTech. Is that Do they take equity? [13:40] >> They participated in the safe note as well. They I think they put in $75,000. [13:46] Interesting. Do they require that if you're gonna go through their program? [13:49] >> They do. Yeah. They require the investment because we were like, you [13:51] don't have to like, good. Like, we we raised this They seed [13:55] >> were like, we need to. [13:56] And we're [13:57] >> like, okay. [13:58] Very cool. This is a heck of a story I'm rooting for you guys. I'm curious to see what you release next. In the meantime, Ryan, let's wrap up with the famous five. Number one, what's your favorite business book? [14:06] >> Favorite business book? I would say The Four Steps to the Epiphany by Steve Blank. [14:14] >> Great one. [14:15] Number two, is there a CEO you're following or studying? [14:19] >> That's a good question. [14:23] >> Let's see, like today, present day? No, there isn't. I don't think there's one person. I've always liked the Bootstrap people. So, [14:34] >> Baremetrics, I'm actually forgetting his name. [14:38] And he sold it. Pigford. He's exited now. But yeah, we love obviously [14:43] >> Yeah. Yeah. So those stories were always kind of my favorite. So Josh Pigford is one. But no, I don't I don't think they're that's probably something that I should do. [14:52] No. No. Sometimes there's not one. That's totally fine. Number three, what's your favorite online tool for building Chimney? [14:59] >> For building Chimney? For writing the code? [15:02] Yeah. Or however you define building. [15:04] >> Gotcha. Let's see. Online tool. [15:11] >> Figma. Figma has been instrumental. [15:13] Number four, how many hours of sleep do [15:15] >> you get every night? [15:19] >> Honest joke is, like, guys, I need my nine hours tonight, but, no, that's not true. Probably seven. Seven. [15:29] Okay. And [15:29] >> what's your I one of those unlucky people that kind of requires a little extra sleep. Yeah. [15:33] Yeah. What's your situation? Married, single kids? [15:37] >> Married, no kids. Yeah. Married in October. So it's like six months now. [15:40] Oh, congrats. That's great. And how old are you? [15:42] >> Yeah. Thanks. [15:43] 30 [15:44] >> on Saturday, I'll be 34. [15:47] Oh, congrats. [15:47] >> 16 till 50. Yeah. [15:49] Happy early birthday or 14 past 20, you know? Or 14. [15:53] >> Yeah. Whichever way. [15:54] Last question. What's something you wish you knew when you were 20? [15:59] >> Oh, man. Let's see. That everything will turn upside down and nothing will stay the same. No, I'm just kidding. Something that I knew when I was 20. [16:10] Or that you wish you [16:10] knew when you were 20. [16:12] >> That I wish I knew when was 20. [16:15] Yeah. Yeah. It's probably the fact that [16:20] >> there So I used to think, and probably a lot of people maybe still think this, is that people in power, maybe they did something different or they're special or they know something that you don't know. Like turns out that's not true and everyone's trying to figure it out as well. I didn't know that yet. [16:37] Guys, fingers up to power a little bit is the takeaway there from Ryan. But look, they're building chimney.io, which enables companies like banks to embed calculators in their web experience so you get more customers. So they're now doing about $34,000 a month in revenue, up from $25,000 a month about a year ago. Raised a 1,300,000 seed at a 7,000,000 cap. Before that, very scrappy. They used dev agencies, sales agencies to get their first five, ten [17:02] customers, now serving 60 customers. Three co founders, nine total on the team today about to release a brand new product which we're excited about. Ryan, we're rooting for you. Thanks for taking us to the top. [17:11] >> Thanks a lot, Nathan. Yeah. Yeah. It's exciting. [17:15] 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 1PM [17:40] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM 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 an acquisition, a big [18:02] fundraise, a big sale, a big profitability statement or 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 people are saying. Sign up [18:24] 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, but I do it so that we can all learn. We have to counter those people. We [18:43] 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.