How Compliable CEO Chris Oltyan grew to $270.3K revenue and 7 customers in 2024.

hey folks my guest today is chris ultien he's building a very cool tool called compliable.com which makes gaming licensing easier he's a nine-time serial entrepreneur with three exits he shipped over 30 software products and he's raised about 2.8 for compliable to date chris you're ready to take us to the top sure what does that mean make gaming licensing easy who's paying you for this so it is mostly the operators and the people who want access to revenue in either the sports betting or gaming space so it's really uh and if you want to think about the product what it does it's turbo tax for gaming licenses uh getting licensed in any of the states and jurisdictions in which it's legal is a giant mess complicated but it's the same data over and over and over again uh much like intuit and turbotax really defined how you can simplify that process we're doing the same thing except in the gaming space for licensing interesting okay can you name one or two people that like pay you for this and why they need gaming licenses so uh one of the operators sporttrade is the startup in the space uh and we're working with another major operator that we can't name publicly yet but you know those are your sports books so i will say in general it is the you've seen the ads on tv but with this fanduel those are the types of people that are paying for this because they have hundreds of people that they have to get licensed in order to be able to legally operate in those states so that becomes somewhat of a nightmare if you're doing it all using microsoft excel and lawyers so we can get in there organize the process give them a bit more of a framework and really walk people through all those questions that are poorly worded or thrown up in legislation real quick so that they can get access to sports betting revenue and then translate that into like english so that you can answer it meaningfully and still be able to fill out all the forms in a way that's compliant i see sport trade fanduel draftkings you didn't say them but i did i think i think we get it so when do you give me the back story here what are some of these companies paying you per month on average to use this technology so the way that this industry works uh them and their vendors because in order to sell to those companies or give them like you know if you're let's i'm gonna use fanduel as an example randomly for no particular reason uh if you are a person who is sending traffic to fanduel and fanduel will pay you for that traffic you have that affiliate relationship in order to do that you must get licensed very specifically those licenses tend to be one or two year deals depending on the state and every state also has a different kind of way that you get licensed so we sell those kind of on an annualized basis uh seven thousand dollars a year is currently our beta pricing for it and companies that want to work with these sports books pay us that and that's the annual fee the sports books themselves we have a slightly different model on that there is an annualized fee for the platform uh and then we actually have a per license fee so you have one person who needs to get licensed in three jurisdictions we charge you a flat fee for each of those okay so that's a lot to digest make it simple for me what's the average company paying you per month to use the tech so on major operator would probably be around five to 10k a month for the smaller groups that's about a thousand a month okay so maybe your average is something like two grand a month something like that um okay but two very different cohorts there what's the what's the backstory in terms of uh in terms of launch when did you launch the company so we kind of pegged this at september 18th which is when we presented the first prototype to last year uh last year yeah yeah got it so 2020 and and how have you funded a bootstrap to raise capital uh raised capital and we actually raised capital for a different idea and a different company name we rebranded once we kind of encountered this opportunity and discovered that it was sweeping and that we were the first to really address it directly head-on uh and i i have to say having done this nine times being in a market leader position is awesome like it is very kind of encouraging when you do a press release and then people like follow on their press releases being like no no no we're here too and we do something sort of related you should pay attention to us as well and we're like cool so how much did you raise in what year uh so last year on this pivot after september we raised 1.7 uh and we're actually very close to closing another three right now okay um was the 1.7 million before this three the only capital you'd raised i know we had done bits and chunks before that 600 in a seed round before that as well uh but that was as we came out of tech stars the year before with a very different company and a very different idea the pandemic however had different ideas on whether or not that company would be successful different than ours and like you do we found the thing that was going to work and just to be clear the company that you currently own equity and was actually launched earlier than last year is maybe in 2019 you just pivoted to your current product last year correct i see okay so 2019 you raised 600 thousand dollars pre-seed out of the accelerator program then you raised 1.7 million dollars in 2020 last year call out your seat and you're about to close a 3 million series a mm-hmm or yeah late seed the the words kind of whatever we want to call it yeah whatever we want to call it all right very interesting so um the pivot takes a lot of courage um it was is it just you already have multiple founders here multiple founders so we have i have two other co-founders that went on that pivot with me and you know yes it takes courage but when it's like well we're gonna die or we need to try something new it's less courage than you think and more just survival instinct did you guys split equity at the beginning a third each uh no when we started this way back when uh it was on an idea that i had i had brought in the initial capital uh and pretty much took no salary in order to make things work uh while we had a consulting gig that kept the doors open and the lights on and was able to divert a lot of that to my uh technical co-founder at the time so in exchange for that i took the lion's share of equity as the labor of his uh various different projects really fueled the company forward we were able to balance that out a little bit more but some of the later co-founders who came in kind of after we had a more established idea of what was going on did not get us substantial equity yep understood understood and then customer story so did you land your first first customer last year for compliable was the pivot complete okay and how many customers now today i think we're up to seven seven okay got it so i mean this is probably gonna be i mean you probably can name all your potential 100 current customers it's just about going and knocking them all down now at this point yeah and especially on the operator side when you talk about the major sports books the way legislatively the u.s is set up it's a very finite number there's going to be like 50 60 players total 2030 of substantial size for their vendors however everybody who wants to sell to those sports books everybody who wants to divert traffic if you decide that the to the top podcast decides to start suggesting people try various different sports books and you want to get paid 500 for those affiliate references then you would also get a license and i see that you have tens of thousands of people who are trying to head into those hills and mine that gold and now chris can i multiply the troubles yeah pics and shovels are good now can i take your seven customers times that ac beverage you told me earlier you guys are doing about 14 000 a month right now in revenue yes okay and where was that exactly one year ago okay got it so july of last year or august of last year you were still at about zero dollar you didn't have any customers at that point all your customers were running if you didn't have a product uh september we didn't have a product we just had an idea we got people to sign on to a pilot by november we had people running through the product uh and we actually booked our first revenue july last month got it okay got it so you've gone from nothing to seven customers sort of in the last you know call it three months now all that being said you essentially raised that 1.7 seed round pre-revenue what valuation cap were able to negotiate uh we were a pre-revenue there of about 4.5 uh free money or pre-money i'm sorry yes yeah yeah so that was a price round it wasn't it wasn't a convertible note uh correct okay got it that's rare why did you decide to do why'd you decide to price it pre-revenue uh we had established kind of where we were and where we wanted to be uh we did have existing investors and we had a prior price round so that was kind of an easy place to base off of and actually no that was uh the first round right after uh tech stars was the uh four million money price round then we did for the 1.7 that was 6.5 got it got it so you went from a 4.5 million valuation in 2019 after tech stars raised 600 grand there you then raised 1.7 million at 6.5 posts so that's selling what about 10 percent of the business something like that maybe a little bit more 15 6.5 8 posts and then you know this time around we're targeting uh a higher number as well and it was an opportunistic round and it was a much different negotiation and it was uh very quick we actually weren't looking to do this raise we were kind of good for cash flow had enough powder in the keg to get us to what we believed enough to get us to kind of break even but there was such demand once we were out in the market and announced the name change and we had a string of customers and investors come in so we were able to kind of move more quickly on that higher valuation higher valuation how much higher yeah almost double almost double okay so to call it 12.3 but why take that i mean it's still dilution dilution's dilution why take the dilution uh acceleration and speed so right now we're at a seminal moment for the sports betting industry and so much is happening and so many states are about to hop on to that bandwagon if we can get out there ahead of that change if we can be the provider for the states themselves to be able to grant licenses that puts us in a pretty unassailable position and that opportunity will exist for the next six to eight months and we simply don't have the engineering capacity to capture the entire thing right now so sure we could kind of make it happen over the course of 12 months but doubling our engineering team we can make literally the same thing happen in six so what is the team size today how many people so right now we're at 13 and we'll probably be 20 by the end of the year and how many engineers today uh right now we have five of that team as engineers any quota carrying sales reps or no no none we have a we one of the founders is our chief revenue officer and they are pretty much all the outreach towards the operators is being handled by them so that really helps you know focus exactly what that outside sales organization is going to be doing however we're getting so much inbound and the channel partnerships because what happens is we get an operator and then all the vendors who want to work with that operator we provide them that licensing service so that the operator knows what's going on and can make sure that the people that they're working with are properly licensed and that's the pain that we're building if you close this three on 12 so assume that's already closed how much equity will you still own in the business i think i'll be at roughly 30 what do you mean what do you mean you think you've definitely calculated this so you know yes i've calculated it we have an option pool all those options aren't specifically allocated how big how big is the esop how big is that equity pool for employees oh we started at 12 with last round and we've been giving it away steadily since but we have about half of it left so are they requiring you this new three million are they requiring you to make that six percent bigger no and really that's why i'm calling this kind of another seed round or late seed round it's really just opportunistically saying hey for basically the same terms we're just going to continue moving forward and accelerate our ability to capture the market but not really giving them the sorts of preferences you might see in a series a so on a fully diluted basis after this round and assuming you use the whole option pool team members will own 12 percent you'll own 30 percent where's the rest uh the co-founders and the investors how much do the co-founders still own so all together we'll be very close to 45 including the employee options or no uh yes including the employee options so your co-founders only own three percent 30 fifteen you own thirty percent so we haven't allocated the full employee options uh and the co-founders together have about 15 between them right now okay fair fair fair so 30 plus 12 plus 15 the rest the investors own is that right all right okay okay interesting how do you i mean this is one of those things to me it's it's sort of fascinating right it's a very different choice than someone that like bootstraps to half a million dollars in revenue and is really profitable and pays themselves dividends i mean does it ever worry i mean how do you make money on this thing you've got to go validate you're at 160 000 an ar you're raising a 12 million valuation you can do your own math on the revenue multiple but you've got to grow so big to even grown to that multiple before you like see any sort of dollar from an exit how do you get there so that is kind of the nature of the beast right when we started this business it was very much a venture-backed business and there are certain realities that i accept as a founder when i say i'm going to be a venture-backed business the hockey stick growth that you gotta hit is just a reality of taking that sort of money now i think the market opportunity is there and it would be impossible for me to do that with the resources that i have and the nature of this market it just generating itself from nothing so quickly puts this timer on it so when time and opportunity are crunched that much taking in outside equity it's expensive equity right you know venture capital is the most expensive money you'll ever get i could get a bank loan for less than 50 annual return and still be able to do a lot of what i'm doing but being able to get that money quickly now so that i can grow this organization and be there for when this industry explodes is where i'm positioning it so yeah i unders the bet makes perfect sense i get it go big or go home that's great let's wrap up here with the famous five number one favorite book uh built to last number two is there a ceo you're following or studying uh tom hickley tom hinkley what's your company is he running uh 10 10 10 okay interesting it's fascinating it does uh founder problem fit interesting okay number three what's your favorite online tool for building the business pivotal tracker i'm a product guy it's hard for me to get away number four how many hours you sleep to eat every night yeah i get an hour of sleep every night no no how many hours yeah oh you don't get come on an hour's not healthy how many hours do you get uh usually four to six that's still really not that healthy how long can you go on that before you start having health issues uh about a month a month and a half okay then what's your process for catching back up uh hopefully i'll be able to take a vacation after this close but interesting we were doing a close doing a round uh of grants and growing the company and a couple other things were going on just a confluence of fun and suffering i totally understand chris uh talk to me about situation married single kids uh married with kids how many kids two two kids how old are you uh i am 41 41 he says with a question mark take us home what do you wish you knew when you were 20 chris uh jeez i mean i started a first of my several companies then it was during the dot boom and it would have been nice to know just how bust it would have been shortly after all right guys there you have it compliable is helping folks get gaming licenses when they need them think fanduel sport trade etc draftkings they've got a team of 13 today they raised one 2.1 million today at 600 precede 1.7 seed at a 6.5 million post trying to close a 3 million on a 12 free money right now as they serve their seven customers and generate about 168 thousand dollars in annual recurring revenue to date looking to scale quickly as this market is emerging fast chris thanks for taking us to the top damn 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 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 pm 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 fundraise a big sale a big 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