Collabogence Inc Revenue & Valuation (2021)

hello everyone my guest today is Peter SMI he spent half of his life on the other side of the Atlantic and lived in seven countries and also speaks four languages he raised in the age of Matrix management running programs initiatives projects and businesses globally he's been a long proponent of collaboration and tools which enable it he's today the CEO and founder of cabagin a Toronto based firm which uses data to measure the changes in Effectiveness and productivity of people and spaces Peter are you ready to take us to the top yes absolutely so just to be clear is this sort of a consulting company or is there real software powering what you do it's a SAS business oh at a in an earlier phase of my life I spent doing consulting work and this is now a pure play analytics company so it's a tool which either companies use directly or Consulting companies such as facilities management or HR strategy consulting or workplace strategy Consulting companies would use to implement and do larger projects with their clients and what do you sell it for what do they pay you per month on average to use the tech so so this is something that depends on the number of data sets that or applications that data is pulled from and the number of people that are used but it typically ranges in anywhere between two to five dollar per month per person so it's a typical SAS uh application that in the longer term the value for the client comes out of the dashboards and the insights that they can derive from that now are people usually buying this directly or is it usually a company logo signing up for 100 seats or something like that no so this is we're still in an early stage so we're looking at largely or larger organizations from this perspective um so we're looking for projects with thousand to 2,000 or more people but we're talking to Major Banks um pharmaceutical companies that are all looking at 50,000 plus per year so in the first phase we'd be looking at typically a large building which would have uh anywhere between two to 5 thousand people and when did you launch the company what year so the year the company was launched about five years ago as a name um we went down a road first in terms of since we was focused around measuring collaborative performance we were looking at the HR space and the frustration back then was they weren't comfortable with data they weren't comfortable with de identifying they weren't didn't have the authority or the power to actually Implement what needed to be done so we then switched um somebody put me on a speaker stand at a conference which was work Tech uh so technology in the workspace and that's where the first clients came on board which were companies that were doing major changes in the workplace strategy so moving from assigned desk to activity based workspace for instance um that were then interested in actually measuring the impact of the productivity and effectiveness of their people and their spaces so what year did you get your first customers paying for the software the software tool so that would have been in 18 2018 okay and remember do before we get more of your backstory it just sort of teased us a little bit do you remember what Revenue was back in 2018 your first year selling the software first year was about 70,000 okay yep and probably in the hundreds last year and right now because we've done a major shift toward helping organizations with the workplace strategy both to work from home and new office environments uh we see that going up to probably a run rate of close to a million by the second half of the year and what run we are you at right now so we now we're looking at we're transitioning in the phase from Project based to um FAS so we don't have the monthly subscriptions yet but we anticipate that signing those the first ones of those in the next uh by the end of the first quarter how much revenue did you do total in December oh in December no for the whole year was about 100 so we're not on a we're not on subscription base yet okay so when I asked you earlier when you sold your first software you said 2018 if you weren't selling subscription software back in 2018 what were you selling Project based okay there wasn't software you were selling then it was it was project management um no it was it was all algorithms that we Ed with their data so it was more of a before and after and the insights and analytics that came out of that uh recommendations were done by the consultants and the company itself I see okay and so so um help me understand today a little bit more about the team before we dive into your product and the problems you're trying to solve how many Engineers are on the team so we have about six right now um and we're prepare preparing everything for the next big data sets that'll be coming somewhere toward the end of the first quarter that we'll be looking at which we'll also use to build the dashboards which ultimately will become the SAS platform and Peter What's the total team size today six six plus myself okay oh so they're all Engineers all well there's one one one big business person um who also has a lot of management experience with the in the technical environment and build of these types of organizations he'll transition more into a chief operating officer okay so um yeah so you can't have a six total team size and then six engineers and then one extra that would be seven total so like What's the total okay seven total including you yes including me okay so so that means five of them are engineers and then you have a this coo guy and then you correct I see okay and and so give us more of the backstory here what sort of got you into this space so what after business school which I did in the United States I landed at honeywell's European head office and then went to a Swiss company which is now part of seaman in Switzerland in global roles because I speak a bunch of languages I was launching products globally uh Global account account management these types of things and if I fast forward to five years ago with the Inception of of cabagin was really the idea that I saw companies that were looking to do one of three things or all three at the same time one was to change the culture in the way they work with each other so they needed to have a better understanding of how they work with each other and they wanted to become more collaborative they were changing their workplace strategy and office utilization and shifting from the assigned desk environment to the activity based workspace model and also with the goal of becoming more productive and collaborative and then they were busy implementing a lot of Technology tools which were also enablers to improve collaboration and my comment was that they were spending millions of dollars on each of these initiatives and had no ability to establish a Baseline and no ability to measure any actual impact or change in the behavior so we don't profess to measure productivity what we can show you is change in Effectiveness and productivity which is aoxy for a change in productivity how can you not measure productivity but be able to measure change in productivity it feels like you have to have both traditionally came out of the Industrial Revolution where they were looking at how many widgets can we produce and in a knowledge-based environment productivity is a very difficult thing to measure and other than the financial results of a company overall so really if you want to if you want to do it and we're having some early discussions with some clients that want to start looking at tying change in this measure to um Performance Management so what does that mean though this this all these all feel like big fancy sort of Harvard Business Review Book sort of words to me versus practical real things actually happening in Dev shops and Dev teams well the Practical thing so one of the things that we did is the first client was a major Bank who was shifting thousands of people from traditional office environments to activity based workspace and they were creating spaces with 500 people and they wanted to see who should actually share the space with each other with the view of that it would improve the collaborative collaborative performance so what we then did is we pulled data sets after after 100 you know typically they say at least 100 days in the new space and the new environment before you measure again what were some of those data pieces pardon what were some of those data pieces be specific so if you look at the data sets we could we'll pull data from everything from email to messaging to web conferencing to documents and we use that we have algorithms that actually look at the strength of a relationship between people which is not based on just on volume but also reciprocity so with that we can start looking at measuring the strength between two people but also between two teams and between Collective within a team so if you had a group of 500 people what we actually saw was an increase of well over 30% of that measure that we had so there was a significant benefit of them sharing the space with each other and this is one of the things that now we're looking to do is with some organizations is to actually look to see what has happened to the Collective Strength of these organizations as they've shifted to working from home but what if you're measuring the wrong thing I mean why would email velocity or number of documents shared be a direct correlation to productivity I hate email and I hate documents and I hate Google Drive and organizing documents why would that correlate to productivity well we're not we're not measuring the volume of it we're also saying what I was saying is the reciprocity which has to do with the strength of the relationship between two individuals and anybody can have uh what's the metric Peter what's the reciproc like this these are things that are not like what's the measurement you're using to measure reciprocity well we look at the at the at the two-way traffic so if I send you a lot and you send me nothing then it's nothing at the end of the relationship but if we both send each other a lot it's high reciprocity High reciprocity that's what I'm saying I don't correlate someone I email a bunch to high reciprocity usually people I email the most are the ones I have the most problems with so so that's what I'm saying is what if you're measuring the wrong thing that's the real question here so so with the psychologist what we've understood is if you've in a bullying type of relationship we're not looking at a it's a relationship that would spike so there's a high volume for a short period of time and then there's silence for a long period of time and these are all things that we can pull out on the data also I just don't agree that the pattern of a spike and then nothing equates to bullying no it it could it could be an example of bullying interesting okay what about so how have you funded this thing I mean six Engineers are not cheap have you bootstrapped or raised we've Bo bootstrapped okay we anticipate doing a raise uh by the middle of the year after we signed the next three or four clients how much are you hoping to raise and what what will you spend it on a drive growth so it would be probably million to million and a half and it would be primarily for uh the expansion of the build and the functionality there's some interesting aspect like we have a partnership with a Wi-Fi Tracking Company and we need to build the functionality to be able to integrate the feed of their data so that we end up that we're able to create what we call the multi-dimensional personas so got it how do people move around space and use the space and what's their output and how many customers are you working with today or maybe the right question is over 2019 how many total customers paid you at least a dollar oh it just be the one big bank that we've been working with okay now in discussion in advanced discussions with five major organizations four of which are in the United States Bank a major Investment Bank and so you generated basically a couple hundred thousand of essentially Consulting Revenue in 2019 from one major banking customer correct interesting okay um got it when you'd go out and try and raise 1.5 to two million or one to 1.5 what valuation would you try and raise that so that would be in between five to seven million and I mean people are going to push you on that you're basically pre-revenue right now why are you worth 5 to seven million bucks well that's the assumption that the contracts that we would be signing would all be quarter of a million to $500,000 each so so what if you don't sign those contracts is it how much runway do you have continue bootstrapping well you can't I assume you can't pay seven people full-time on $200,000 of total annual revenue correct so who's putting in the money when there's a gap you no at this point in time we're not paying them how do you get talented Engineers how do you I mean the core of your thing is you're measuring and it's an engineering product how do you argue with someone and say we have quality engineering when you're not paying your engineers well we can put the people in front of them and they can talk to them and they can kick their sins right but why would a talented engineer be working for you for free especially six of them oh so so we're tying them from an equity perspective absolutely so all six Engineers have Equity correct I see I see very cool very good all right let's wrap up here Peter with the famous five number one what's your Business book I go I it kind of dates me um pra and H competing for the future old one number two is there a CEO you're following or studying oh I'm following interesting on a blank right now that's okay we can say none number three what's your favorite online tool for building the business building a business building your business the tool you use the most oh at this point in time I'd certainly be using web conferencing the most number four how many hours of sleep do you get every night anywhere between six and seven and situation married single kiddos kiddos divorced okay and how many kids three three kids and how old are you I am 61 61 last question what's something you wishing you when you were 20 Peter pardon what's something you wish you knew when you were 20 I I knew more information right now I'm still learning more than I ever have guys there you have it we've got a Peter launched collab back five years ago eventually pivoted to more of a Consulting model did about 70,000 bucks in 2018 in Revenue couple hundred, in 2019 now really pivoting to SAS with the six people on his engineering team helping big right now one big bank really measure productivity across their base especially their employee base working in person together is it more productive or not hoping to onboard a couple other4 million doll half million doll contracts before going out and raising a $1.5 million doish round at A5 to7 million valuation in Q2 and Q3 here in 2021 rooting for you Peter thanks for taking us to the top okay thank you 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 1M 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 notific ification to make sure you get notifications when we do go live 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