ChoreRelief Revenue, Valuation & Funding (2021)

[00:00] Hey, folks. My guest today is Tarik Khribech. He's building a tool called chorerelief.com, a marketplace and operation software for home services. Tarik, are you ready to take us to the top? [00:09] >> Yes, sir. Let's do it. [00:11] All right. So we've spoken a couple of times, but last we spoke, I think was back in August or July of last year, you were just really getting going. You had about 200 customers, I think $30,000 in MRR. Help me understand, help folks that missed an interview understand what are people paying you for? [00:26] >> Well, two things now. We're not just a marketplace alone. We also offer service management tool for contractors. The way we make money, customers pay us to connect them with local contractors based on their time and availability. We take a transaction cost from there, but also now small businesses are paying us for a subscription based model anywhere from $59 mid tier $119 $249 depends on the size of the team that they have, and it depends on how [00:50] >> many freebies would they get from us. But as they increase their subscription, they lower down their commission. [00:56] So when you say customers pay to connect with local contractors, those customers are all SMBs? [01:02] >> No, there's some of them. Originally, started with individual homeowners then switched into landlords, and now we're in the process to experiment with small to mid sized property management as well as restaurant retail stores. [01:13] Okay, but the majority of your customers say are homeowners and landlords? [01:16] >> From the consumer side, yes. But the service providers are SMBs. [01:20] Okay, I don't understand that. When you say local con, you're saying pay to connect with local contractors, those local contractors are the SMBs? Yeah. I see. And those local contractors are paying you $59 to $250 per month to get access to those homeowners and landlords? [01:33] >> Sure. I mean, there's always the free tier for them if they want to pay high subscription, high commission fee from the lead that we send over their way. But if they look into create their own invoices, own dispatch and have all the tools and management they deal to run the day to day operations without breaking the bank, We built this tool that brings in the QuickBooks integrations in place, like you don't need to have a QuickBooks, [01:53] >> you can use the same app to create your own invoices, to track your timing, to make sure you can do your payrolls. Also, the same tool allows you to create customized unique invoices to your business needs with the customers. You can collect signature for approval for quotes. And you also have a team management tool that allows you to create some sort of collaborations if more than one of your team members is working on a specific project. [02:14] And who are some of these SMBs that the homeowners and landlords want to use your platform to connect with? They painters, contractors, landscapers? [02:20] >> Yeah, yeah. So as you can see from the T shirt, we're in a rebranding process now, we're going to switch it to AllBetter, because what we build, it's not necessarily just curated for the home service category, it's created for the gig economy in general. But yes, we're sticking to the home service category from plumbers, electricians, handymen, movers, snow removals, but we plan to add in some other verticals as we expand. [02:39] And why is that? I mean, why not go deep on just the categories you're focused on versus trying to go wide and do everything? [02:45] >> No, we're not doing this like right away, but you know, system we built, it works pretty much for it creates some sort of a flexibility for the end users. At the end of the day, the COVID-nineteen has accelerated the growth of gig economy. People that used to do this as a side hustle, now it becomes their main hustle. And we just want to create a sort of foundation infrastructure for the people that are coming into the [03:05] >> gig economy, which by the way, growing three times faster than The US workforce, to have the tools that are affordable and also have resources that allow them to connect with consumers in the area. At the end [03:16] >> of the day, go ahead. [03:17] And how many painters, landscapers, snow removal folks are paying you per month, the $60 to $250 [03:23] >> per So since we launched, we launched this last month, we've already closed. The free package came in, we had over nine hundred, fourteen hundred people that sign up within the first month for the free package for the trial. Now we have about a 40% conversion rate that are opt in into the paying subscription. [03:41] So 400 are now paying? [03:42] >> Yeah. [03:43] And the minimum they're paying is $60 per month? [03:45] >> $60 per month. Assuming it's one solo entrepreneur. [03:49] Got it. So that product that launched about a month ago went from nothing to $60 a month times 400 is about $24,000 a month in MRR. [03:58] >> Something like that. Yeah. And then we're planning on adding the annual subscription model so we can discount the actual monthly so we can have even a long sales ticket. [04:07] And when you add back on the homeowner and landlord side who pay to connect with all these local contractors, how much MRR is coming from the homeowners and landlords? [04:14] >> Well, that varies. We've had anywhere from like it could be $10,000 it could be $35,000 depends on the actual time. But right now, we're wrapping up all of our resources and marketing to focus more on bringing those types of customers. Because what we notice is this, the more job we send to these contractors in a regular basis, the more incentives they see for them to upgrade to their paid subscription model because now any job that we [04:39] >> send you, rather than pay me 20%, you pay me 10%, so that's an incentive right there. [04:45] >> As we ramp up our PR strategy and marketing effort, which we actually put in together as we also go through the rebranding process, we're planning on hopefully getting somewhere around 25, on average somewhere between 25 and 35 a month. [04:58] So last month, all your revenue from both sides of marketplace combined, how much did you do last month in top line revenue? [05:03] >> I don't have the numbers in front of my head, but it's somewhere around the mid thirties. [05:07] Thirties. Okay, that's about the same as where you were last time you came on. So why the flat growth? [05:12] >> Well, you know, the COVID has kind of shifted the economy a little bit more. But we're also didn't have too much of resources on the team, we're just hiring some more members in our marketing team. We can shift the focus on getting into the customer, the contractors. We're heavily focused on building the SaaS platforms. And that itself takes so much time and so many resources from our end. [05:32] Yeah, no, I understand that. Have you bootstrapped or did you raise? [05:35] >> Still, still bootstrapping, but we're getting a lot of interest from outside investors. [05:39] What kind of interest? [05:40] >> Well, you know, the raise we were looking for initially now we had to map, you know, raise up a little bit the ticket entry, we've given a lot of interest from follow-up interest from Lightspeed Venture, [05:56] >> SoftBank and some other Sequoia that they're looking for like, you know, not to be part of the seed round, which because we're like, we're looking to raise about $1,780,000 to get us to where we need to be. But we already have those discussions with them lined up. As you know, once you raise a seed round, you know, you could always go back and raise the Series A within a short amount of time. [06:16] So you're looking to raise 1,800,000 right now? [06:18] >> 1.78, yeah. [06:20] At what valuation? [06:22] >> Well, that's going to be convertible note. [06:25] What cap? [06:26] >> 9,000,000. [06:27] Okay, at a nine cap. And so do you think you'll be able to drive a process there and get that valuation? I mean, that's a significant multiple on your current $400,000 in ARR. [06:37] >> Well, you see that the idea when people are buying into this space, they're not necessarily buying or what the actual return on revenue, they're looking for longevity and how is this business is can stack up in the future. So take a look at example, a SaaS model just for the home service category alone is a company called service titans already at 8.3 billion, purely Yeah, [06:55] I know those comps straight, but people are gonna hear your growth rate and say you're flat. Don't, they're not, they're going to lose your ability to execute. How do you convince them that you can execute [07:01] >> at a rapid growth pace? Don't know what you come up with, but we're not flat. Last year, we did 367,000. This year, we're almost on track of doubling. The user growth has already increased this year by four- Well, great. [07:13] Hold on, hold on, hold on. So I might ignore user growth, look at revenue for a second. I just want to make sure I didn't misstate you because I want to get this accurate. You told me a year ago, you were doing about $30,000 a month in revenue or about $400,000 in total revenue last month. You just told me last month you did about mid-30s in revenue. So $30,000 a month is the same run rate. [07:28] >> Are we talking about the marketplace, are we talking about the SaaS, or altogether? [07:32] No. The question I asked you was, on the marketplace side, on both sides, how much revenue did last month? And you said mid-30s. [07:37] >> The marketplace. That's just the leads that we get. That's not including subscription base that we charge for the contractors to be part of the ecosystem. [07:43] That's what I was asking. So on both sides of the marketplace? [07:46] >> On the both sides, like roughly around 50,000 to 60,000. I don't have the exact number in front of me. [07:50] I see. [07:51] >> Why I you as consumers like you're trying to compare last year to this year, so we grow in the marketplace, the lead gen service. The operation software that's just brand new just recently launched forty five days ago, and that itself is already generating, converting unpaid from free tiers to paid tiers. [08:07] Yeah, no, that growth has been impressive. What I was articulating, though, when I said full marketplace revenue is you've got homeowners and landlords paying you as a percent of GMV going to the platform. And then you've got snow removal folks, landscapers, painters paying you on the flip side. And they're also now paying you for subscription tools to do things like invoicing. What you're saying is that new SaaS tool is growing really fast. And you backed that [08:26] up with numbers. [08:27] >> Yeah. Mean, we're bridging the gap between like, want to make this affordable and simple for small businesses, mom and pop shops. They don't have any resources to find clients, we bring your clients, we give you resource to work and grow your business. [08:39] So why do you need to raise capital? Mean, 1.78 on a nine cap, I mean, you're selling what is that 10, 15% of the business? [08:45] >> Yeah, but it's still I mean, having enough that we want to hire some more team. Sorry, it's hard to do all the good thing and wear too many hats yourself. Like, I'm trying to bring in teams so we can actually grow in a How many are on the team today? Even know. Six so far. Six full time, and there's four that are contractors that we work with on just the social media aspect. [09:02] How many engineers are full time? [09:04] >> Four. Four. [09:05] Are they local or you outsource them? [09:08] >> Outsource. I build the entire firm overseas. So this is my business that I put together overseas. [09:14] Yeah, that's I worked [09:15] >> with them in the past. Yeah, I worked with these guys in the past and previous project, previous companies that I started. [09:19] Is it a marketplace though, like Coditas or Toptal? Or are they just individual developers you found randomly on LinkedIn? [09:24] >> So these are different developers that work within the course of the last seven years. Then I finally put them all together. And I said, Oh, whatever you make in, I'll give you 20% increase. You work for me the whole time. I'll pay you six months in advance. And we put it together. So capital is more affordable. [09:40] Of course, yes. So capital today is you've raised no capital. So do you own 100% of business? [09:44] >> I have 95%. [09:46] Where's the other? [09:47] >> CMO, Paul McFellen. [09:49] Very cool. That's exciting. Are you guys leveraging any paid spend stuff these days or no, you're about to ramp that up? [09:54] >> Yeah, we are. But here's the thing, like also another thing we started leveraging is a PR. And just since I got into the PR, we've already got like seven different outlet channels, seven cities that already feature our stories. I think that's where we've shifted more focus to build credibility, pull the brand awareness, and then perhaps we can take those stories and then craft them up into good paid ad and run that into Facebook to get even [10:14] >> more credibility from the people that did not see those segments. [10:18] Do you track how much project volume homeowners and landlords pay contract on your platform? Do you track that GMV every month? [10:26] >> We do sometimes. A lot of times what happened is we've seen this. Somewhere, we're still trying to figure out what's stopping so many of these homeowners, even though they're getting bids, but they're not responding back to the contractors, or they canceling a job for no reason. So we try to figure out what that is. And that's what some of the things me and Paul are currently working on just trying to get some extract some feedback from [10:45] >> the users. Like, okay, we sent you four different bids. Why didn't you decide to hire anyone? What stopped you from making that decision? So that's the part that we really heavily now focus on is the consumer side. [10:56] All right, let's wrap up here with the famous five. Number one favorite book? [11:00] >> Zero to One, Peter Thiel. [11:02] Number two, is there a CEO you're following or studying? [11:05] >> There's a combination actually. One is obviously the Elon Musk, the innovations that this guy is just looking for ten years ahead of it, anyone else? And the second person is [11:20] Elon Musk is fine if the second one isn't obvious. Gary V is good. Number three, what's your favorite online tool for building the business? [11:29] >> My preferred tool that I use, even though my sound is so archaic and everything, I like Skype just so I can keep that interaction with my team on real time. [11:38] Number four, how many hours of sleep do get every night? [11:40] >> Depends. Sometimes three, sometimes I just sleep four hours in every two nights. [11:45] How much did you get over the past twenty four hours? [11:48] >> Last night I had six hours sleep. [11:50] And what's your situation? Married, single, kids? [11:52] >> Oh, I'm still married. [11:53] Any kids? [11:54] >> Not yet. [11:55] Alright. And how old are you? [11:57] >> I just turned 41. [11:59] >> 41. Happy birthday. [12:00] Last question. You wish you when you were 20. [12:04] >> Oh, man. That's easy one. Just take all my saving and put in Bitcoin. [12:10] Guys, there you have it, ChoreRelief, helping homeowners and landlords connect with local contractors they need, whether that's a painter, snow removal or anything else. They're going to be expanding markets here shortly. They just launched their SaaS tool, helps these local contractors do things like invoicing, charging $60 to $250 per month on that. Went from nothing to about $20,000 in MRR on that very quickly, over a thousand on the free trial, 40% converted to paid. That plus [12:31] their other side of the marketplace revenue equals about $60,000 a month in revenue right now, which is double where they were about a year ago. He's looking to hope to take this growth and go out and do an equity round, looking to raise 1,780,000 on a 9,000,000 cap. We'll see what happens. Tarik, thanks for taking us to the top. [12:45] >> Thanks, man. Thanks for having me, Nathan. [12:49] 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. 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