Cloudbeds Revenue, Valuation & Funding (2024)

guys Cloud beds launched many years ago broke 10 million of Revenue back in 2018 today over 2.5 million beds across 27,000 paying customers use them not just to manage the bed and the check-ins but now getting into fintech he's got 75% ker over the last three years north of $50 million of Revenue he says quote easily h100 million dollar next year we'll see what happens hey folks my guest today is Adam Harris he's the co-founder and CEO of cloud beds Global leader in technology that unifies Hospitality with one platform they raised 250 million bucks of venture capital and earned numerous Awards including America's best startup employers inc's best workplaces an entrepr ey entrepreneur of the Year Adam you ready to take us to the top I love it thanks for having me well it's good to be back I know we had a we had a nice conversation back in 20121 um what is uh what's what's the big update since then none of us obviously predicted the market would do what it's Mark doing interest rates up 7% how's this impacting Cloud beds you know fortunately enough travel's been pretty pretty much Revenge travel ever since lockdown so we've seen tremendous amount of surge for individuals wanting to take that once in a lifetime trip unfortunately I think the econom is catching up a little bit and 2024 will be a really telling time especially during the winter period for all those in the northern hemisphere but look it has been one of those one of those couple years for the records in many different cap capabilities but the thing that I think I'm more most most excited about is the digitalization curve is starting to catch up in favor and the industry is starting to catch up to what the consumer is looking for and and and that's a good thing for our industry and more importantly that's really good for the the consumer like us traveling around well look for folks that that didn't catch and I I I forget the history we actually talked in 2018 and 2021 and now today but for folks that missed those first two episodes I I feel like I feel like our 2018 conversation was I I can't really say but back when you were a baby at only quote only $10 million of of AR but um for folks that misses episodes who is cloud bed selling to today what do you guys do yes absolutely so the best way to think about it is hoteliers around the world run their entire businesses on software and that Tex stack predominantly has been 18 different systems that are inter to joined uh back in the day it was serialized cables on premise now it's all in the cloud but it's still disjointed and too many different systems connecting to one another Cloud bed slides a box across the table and say hey everything in that runs your business more effectively and so we take the the day-to-day operational side of running a hotel uh in a much more modern uh capability we do in 157 markets across two in half million beds in this world now we're the category leader for independent Hotel years and man I uh that's been a long time ago when we were 10 million in ARR and we've definitely grown since we're 7 757 people uh in 41 countries around the world now and and it's been quite the journey 757 how many people I imagine my hearo this and go is this like how much engineering is work is really needed here but 757 people how many are Engineers uh almost a third of them are thir product in engineering yeah so we spend a lot of time and energy on R&D um Nathan just to to to bring us back to 2018 we were only 40 people then oh what's going on there YouTube good to see you 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 287 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 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 valuation this year now 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 valuations 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 right so the teal is what a 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 realtime valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22% 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 valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to 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 founder path.com products SLV valuations or if you go to founder path.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 all right let's jump back into the interview that's no that's it's it's incredible um it's incredible the growth curve there so 757 250 uh engineers now I guess when you say 2.5 million beds um what's the like I'm not quite sure the right way to ask this question but if you talk about like a building right and there's 20 beds in one building my question I'm trying to ask is how many buildings do you serve today right what's the right way to ask that question yeah you know it's different because sometimes you'll have a one unit right I might have a short-term rental that I'm I'm powering and that short-term rental might be in a building of many short-term rentals but the way I look at it is you know we have roughly 20,000 building entities around the world that are powered off our software uh give or take every single day um some of that's seasonal but yeah it's a it's quite the story for sure so what what is that up from so if you're doing 2.5 million beds today where were you caught a year ago oh man that's a great question I don't know that off the top of my head um or what would you maybe you don't use that maybe it's not number of bed but what would you say growth rate has been Cloud beds the past 12 months you know we've grown over 75% kager in the last three years so really really top core tile growth rates and that's continue to sort of maintain um knowing what the publicly traded SAS analoges are we're better and faster than all of them and we're doing it at scale so no slowing down from our our our business but we also have a uh a dark night in that story we are a fintech company just as much as we're a SAS company we've seen tremendous amount of acceleration in the ability for us to bring in financial products into our capabilities so imagine every reservation that runs through a hotel we can also do all the the the capturing of that Revenue through credit cards and wallet type uh transactions and we handle all that so what year was fintech introduced officially fintech was introduced um in our first Market 18 months ago um now in 30 markets uh within the last three weeks so big rapid expansion this past uh six months and what's the opportunity that you see there you know if you process five billion of gmv you're keeping 1% or what's the revenue upside or potential you know it's really hard to look at the take rate because every jurisdiction is is governed by different rules but it's a big Market nevertheless it's one of those things where if you look at toast as a publicly traded company or Shopify as another you know 50% of their revenue is coming from fintech Solutions I look at it as probably something similar right now it's less than 20% of our overall Revenue but it's fast growing it's multiple 100% year-over-year growth rates in that sector uh the thing that I like about it is it's incredibly sticky right every hotel in the world needs to capture revenue on behalf of their uh guest and if we can do that in a much more efficient way pre-arrival during stay create microtransaction opportunities It actually drives more revenue for our hotel um and creates a lot of opportunity for them and so we're we're just pleased that we're part of that storyline and the more and more we do the more and more we're going to give back to the hotel over time but yeah we are we we do over 10 billion dollar in gmv just in reservations within the the key markets that we serve obviously it's a much bigger number as you think about all the markets we serve but you know that's a big opportunity for us to take a little little sliver of of of value yeah when you say you sit on 10 billion of gmv is that mean you're so close to it you can count it up and add it or that's the gmv that you're also taking some economics on in other words they they've installed your flow your fintech products no so we we we see it we touch it we we see those reservations flowing through us it might be in a jurisdiction that introducing a payment processing capability is limit to a local entity so I'll give you an example uh in Costa Rica for example you need to be a licensed business to take processing you can't be a third party so there's there's ramifications of different jurisdictions around the world and so we partner in some markets and then we underwrite in others and in the US Canada Europe Australia New Zealand we actually underwrite it and now we've expanded that underwriting ability into other markets as well so very excited about that yeah no it's extremely interesting I mean um so 10 billion of gmv across 2.5 million beds that means each each bed average annualized gmv is something like four 4,000 bucks something like that is that right um yeah it's a great it's a great way of thinking about it it doesn't necessarily always equate to something that's simple because not every Hotel takes a lot of credit cards sometimes it's cash so there's actually different sort of money flow part of the world is only wallet specific Asia would be one of those examples some of them are doing it on installment like Latin America that's super popular now we see Clara and a firm becoming popular in the US so even though it's really really big it never sort of works out to be let's just do the 1% number and feel really good about I would love to be part of that 1% magic number but I don't think that's going to be the case but nevertheless there is money there but really there's money to serve our customer with we can bring value back and in the reality the reality of this is there's too many intermediaries with their hands out you know our property opportunity so the The Tam that we service today or I guess a Sam that we service today spends about $ 87 billion a year in intermediary fees $87 billion a year is our what our Sams hand over to someone else for providing value in this industry I want to find and what percent of that is total G of that is that of total Sam gmv oh I mean it is it is probably 15 to 20% of the total Sam gmv right got it so so it's a big so the the the travel industry is a trillion and a half dollars for lodging it's massive right but if booking.com is doing a 100 billion of that Airbnb Expedia doing roughly a 100 billion you have this whole wholesaler travel agent intermediary I mean you can just keep adding it up and adding it up now Google's in that foray so what we're trying to do is really fight back to bring more direct connection with our customer and that guest at the end of the day sh shave some of that 15 to 20% commissionable rate and put that back in the properties so I think I mean there's a lot of ways to make money on fintech when you sit close to payment flows the one an example dis with was travel folks or Expedia which which you know obviously if Expedia helps you find hotel they're going to take something from the hotel and exchange for giving the hotel that lead just to be clear you're helping a short-term rental in Austin Texas potentially find a lead to rent their house for next Thursday and Friday is that what you're saying yeah less short-term rental more hotel but let's say a hotel has an open bed we're trying to find that guest directly and bring them to the property owner how do how do you do that because like if I go to cloud.com I just see software like what's your equivalent of expedia.com we don't have the equivalent so what we do is we feed it into various sources so for example 62% of all origination of travel these days is happening through social media influence so using ads very targeted ads that are automated using generative AI we can place an advertisement in front of a search population that's looking for a property that could be event specific that could be I'm just looking for a property in Costa Rica it's called our amplify solution so we're not at we're not a brand not a place that you go we are just originating the way to reach the guest and then sending them right back to our our booking engine experiences or landing pages that we create on behalf of the property to help them transact and we take a very tiny tiny sliver that in comparison to what Google or excuse me what expedia booking.com would charge at 20% what's Tiny I'm sure you don't want to give an exact number what's a range like under 10 under 5% under 5% yeah so we're not trying to ni we're not trying to nickel and D we we believe that there's value there the best part about it is the Ros on all of that dollar spent with us is in the teens in terms of multiple return on on on their money spent so like giving a 13x return on every dollar they spend with us is beautiful we want to do more of that um I would love to find a money manager who I could give them a dollar and they could give me $13 back consistently right but so we figured that out we we have various ways that we're doing that in an automated manner we're going to EXP that so that's our new product that's out yeah what dollar volume of like hotel bookings will you drive through that funnel you just articulated the ad to the landing page I mean will that be a million this year 500 million a billion uh our hope is to do a billion next year through that um but we're doing millions of dollars a day now so it's it's really exciting okay so billion next year if you want that to grow 200% year-over year that means you think this year maybe you'll do 150 200 million in bookings to your clients through through this engine platform that would be the Hope um probably won't be that total because we're testing some things out and we're also giving away the software for free certain certain scenarios but nevertheless you know just in our direct booking capability we have we were the launch partner with Google which was really exciting we're doing some really cool things with Google in that area um and and we're starting to see the proof in the pudding now it's expanding it further I mean we have one of the largest populations of hotels in the world in all markets and so the data that we're sitting on is really getting us sophisticated to try to find those little sweet spots it won't work for all properties but it definitely works for most and so that's what we're trying to dial in no there's uh when you sit close to payment flows there's so many ways you can help the End customer so you this is one thing you're testing I mean but I think I think to something that I mean you read squares right uh uh 10ks and 10 q's and you read about how much they're doing on their lending platform you're uniquely positioned to protu Future catch flows on any short-term rental why not launch a lending company and make a you know 10 points of spread it's a great it's a great question and it's something that we definitely have on the road map to explore it's one of those things where that is one example of maybe 10 to 20 different sort of layers that you can continue the fact that we're looking at both sides of the Ledger and we're fully understanding what the business operational needs are um it gets really excited really quickly we should probably talk about the lending I know you uh know a few things about lending well I think the what the reason and I thing that I struggle with the most at path is actually sequencing when you sit on so much data the hard problem is not like I didn't just give you some brand new idea you never thought of you know about that idea but the hard part and who wins marketplaces it's actually what do you decide to launch first second third so it sounds like you launched this direct booking capability first there's a reason you did that like I'm curious how you think about sequencing what's number two what's number three and why the order yeah so when payments first so that we could capture the actual transaction on the micro level and then when can we drive more to those same Chann Chanel now it is that's direct booking can we now further that and bring more micro transactions during the stay to enrich the opportunity to build more Revenue capacity for the what does that mean like I buy this I buy the Snickers bar in the lobby yeah exactly and to get you to go buy the Snickers bar in the lobby or to upsell you during your originating of during your pre-arrival flow or to say hey how are we doing oh by the way Nathan what are some inces interests that you have around the area so think about think about the side of a business right you have the business side of a hotel and then you have the art the art is the experience that you feel when you're staying at a hotel the business side is just the check in the collection of payments doing the accounting and all that fiscalization so what we believe is there's two sides that we have to do incredibly well now what I want to do is bring you to the product of a market and a product of the market is all the things that sit around the property and that is very very microtransaction heavy there are many events where you're like damn it I wish I could just get a Snickers bar right now well hey if I can just text the application which I power and go hey front Des I love a Snickers bar can you run it to room 10 108 they'll be like hey Nathan no problem let me run you Snickers do you want a Pepsi also you're like yeah yeah that sounds good plus you know why don't you send up two bottles of water they just created transactions whereas most times the guest is actually leaving property to go get those things yeah and so they're losing on the 7-Eleven down the street is taking that transaction value so we're trying to bring that uh full circle in but I agree with you fintech loans um payroll capability like I have employees logging in and logging out of our application we're time tracking them every single day extending that into the ability to just hey do want us to do their payroll now I'm not trying to be a payroll company however I sit on a lot of data to enable that payroll capacity now doing that in 41 different markets around the world is incredibly challenging so this always begins to be let's look at the tip of the spear where is markets that we can make sense of it slowly roll things out but right now we're just trying to roll out universal products that benefit the largest population of hotels y 2018 you told me 9,000 customers 2021 I think you got up to 22,000 is what you told me how would you define it how many customers would you say you serve today yeah north of north of 27,000 so really good growth curve we've changed our customer our customer's got a lot bigger which we're really excited about so you had a $93 arpu in 2021 would you say that's more than doubled uh a 90 $93 per per month per customer on average significantly and that's doubled because of all the I mean I'm looking now at your drop down you have you offer way more products than you used to that's right we we are we are a full platform the platform is incredibly extendable we have upsell capability these days and then we also have a Marketplace of 400 different partners that can be introduced into the equation so this is a this is a best-in-class platform these days it's it's quite fun to see what year what year do you think you think you'll break a $100 million run rate can it be next year very much so is that feel that feels like a comfortable goal or a stretch goal for next year easy interesting and where are you guys at today oh I can't say that right now for a couple reasons but we we are very close to that magic number that you just talked about can can you say your North you told me this VI email but I don't want to say it because you didn't give me permission can you say what you're north of today uh why don't you give me some ranges and I'll nod are you north of 50 million today very much so there we go okay so we'll see what happens as you move into next year Adam let's wrap up here with the famous five number one favorite book uh Atomic habits number two is there a CEO you're following or studying oo right now Yik Jeff weer still but he's not a CEO anymore that's okay still a good Le number three favorite online tool for building Cloud beds favorite online tool for building Cloud beds something you use a lot just run the business uh you know I'm really having a blast with chat GPT open AI yep number four how many hours of sleep do you get every night seven and situation married single kids married two kids under four so brutal brutal period of time busy guy got a teenager Cloud bets how how old are you I'm 42 last question something you wish you knew when you were 20 oh my God there's two sides of the coin yeah so either do or you don't either way you're right and so it's better to be doing I love that guys Cloud beds launched many years ago broke 10 million of Revenue back in 2018 today over 2.5 million beds across 27,000 paying customers use them not just to manage the bed and the check-ins but now getting into fintech he's got 75% ker over the last three years north of $50 million of Revenue he says quote easily $100 million next year we'll see what happens Adam thank you for taking us to the top one more thing before you go we have a brand new show every Thursday at 1 p.m. 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 backend 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 1:00 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 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 fund raise 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 Nathan la.com forward SLS slack 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' support all right I'll be in the comments see you