How DevStride CEO Phil Reynolds grew DevStride to $35.7K revenue and 2 customers in 2024.

hey folks my guest today is Phil Reynolds he's currently the CEO and co-founder of Dev stride previously he led brightcore to series B led by Warwick Pincus at 180 million post and then he's recently closed 3.3 million precede to build and grow Dev stride which is strategic portfolio management for agile teams Phil you ready to take us to the top absolutely thanks Nathan all right so no boots dropping for you huh it's it's VC or bust well I bootstrapped my last company um for quite a while and um bright core and so brightcore for was bootstrapped for quite a few years and we really enjoyed that we enjoyed growing the company in more you know lifestyle uh but what I learned at the end of it by the time I wouldn't raise money was boy I could have got a lot done a lot faster had I just gone out and raised money to begin with and what are some things you could have done faster you think and give us some context like how many years did you bootstrap and what did you grow Revenue to before you raised out outside Capital yeah so the last company we started out doing like quoting systems for uh insurance agents and we ran that totally bootstrapped for about five years didn't raise a capital from anyone I got approached my group of our customers to build a core admin system and then we did a seed round uh which helped and got us to Market didn't win another seven years before we raised the series hey and then did a series a and 18 months later did a series B and 18 months later I exited the company so we kind of did the the standard uh you know founder vc-led uh growth path in the last three years of the company's history but I did it for 16 years you know in aggregate that's amazing and how patient were I mean what did you grow Revenue to before your first dollar of external Capital yeah so for the before the first dollar of external Capital we're up to about 900 000 a year in ARR and then uh you know we raised that money took it to um about five million and then went from 5 million to about 20 million and um heading to the series B and so it you know it accelerated quite a bit quicker after we raised some money I got some more resources what was the growth unlocked there was it just more like on ads more Engineers what was it yeah it was a lot of things a lot of its product Market fit in uh so you know what I did previously was Enterprise software what I'm doing now is pretty much Enterprise software that I've tried this all about orchestrating you know complex portfolios in agile teams doing really complicated work and uh those Enterprise customers need Enterprise features and it's just really difficult to build that with you know two or three people bootstrapped in a garage somewhere uh you need real you know professionals with real resources real access to customers and so it was just unlocking all of that made a huge difference yeah a lot of Founders in 20 during covet were doing down rounds right the world is a crazy place people were like I don't care just give me the money you have you know when you look at your bright core history right 47 48 million from Warburg pre-covered right and then in the middle of coven right serious C for a lower amount 20 million that has sound signs of a Down Round all over which is not a negative thing that's your job as a Founders not run out of cash so just a curiosity I mean was it a Down Round yeah so so when Brett raised that money it was one of those hey we see winter coming and we know that it's going to be a while so it's going ahead and capitalize now and make everything um stabilize the company so we can weather this storm and we you know all the indicators I'm sure everyone else has talked about on your show we were seeing those same things yeah and that was the one that was at the One A Day post right that no that was actually uh the the series C round which is different the 180 post was a series B round and that was kind of that was only 18 months after a 60 million valuation or series a so so we tripled our evaluation in an 18-month window there got it so the 13.5 was the a the 47.5 was the B it was the B yep I see so 47 into 180 posts okay so you sold about 27 28 of the business in the B yep yeah okay okay fair enough and then did you stay with the company through exit or you left between B and C yeah so I I left between B and C I was I wasn't at the helm right at the tail end there so the sea closed a couple of months after I exited the company yeah and now is this your brother you're building this with you have this same last name it was it was my cousin it was my cousin yeah so he stuck around no he didn't actually he exited the company a year before me so he exited right after the series B he was like series B and the nature of this has changed enough and I think I want to do something else and I stuck in there for another 18 months uh you know being founder guy running the company with a private Equity Firm but it was definitely a different world oh what's going on there YouTube good to see 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 2807 interviews I've done manually saves you a lot of time well we've done this we've built the 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 evaluation this year 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 frownerpath 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 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 not built off random data again you guys hear these interviews on YouTube all these datas are built from Real Time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent 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 valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna 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 founderpath.com forward slash products forward slash evaluations 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 all right let's jump back into the interview okay so you take all those learnings you then launch depth chart why you could do anything in the world right I mean you're a Founder that had you know you built something it doesn't even matter really if it was a successful exit or not you built it you raised you had got customers you have 20 million Revenue whatever you want why was devastride the right way to use your time so I had this really nasty problem at brightcore that I was never able to solve with existing project management tools um and it goes a little something like this if you're a meaningfully sized Enterprise software team you probably have multiple products and those multiple products have their own sort of like road maps that are going like this over time but if you're an Enterprise you're also implementing those multiple products for multiple customers and they have their own timelines that they're trying to hit for their implementation if you take a layer into that a series B private Equity Firm who has their own Roi calculations on when they want to see certain things get you know they've invested as you said 47 million dollars unless you return on this you're not trying to manage kind of this this dimensional data problem uh I have these prod objects and it's just one one team one project have like an authentication module or have a payments module or whatever it is but there's all these different stakeholders that need different things out of it and they'll have different road maps and I can never solve that problem uh at medbritecore and it led to all sorts of you know pain and complication in the process I wanted to go solve that now and so Dev stride is really in many ways just me scratching my own itch of the single biggest annoyance I had to deal with running and growing my previous company that makes tons of sense this is what you call founder market fit right this is a very hard thing to get which some some would argue it's actually more important today than even product Market fits so so tell us what you're building today tell us about some of the customers that are using and how they're using you yeah so what we're doing is we're doing strategic portfolio management for for agile teams and what that really means is what makes it different from I know you've had Zeb on before with click up and click that's an amazing product Monday's an amazing product they're all amazing they're all solving a different problem than we are um they're solving sort of like you know project-based work where I come in and I cut things off a task list uh what we're really trying to solve solve is I have these complex overlays on these road maps and I have to assign work to teams have one team but the one team is accepting work for many different work streams and I have to report out on all those different work streams independently to different stakeholders so so that's what we're doing we're building a project management tool that solves that particular problem for teams who are trying to you know make multiple stakeholders happy in multiple different work streams so who are who are the stakeholders that most of your debit side customers today are reporting out to is it the board is it a senior engineer like who's the who's that stakeholder yep it's going to be typically going to be three it's going to be the executive at the company who says hey what are we doing here it's going to be the board who says what is my Roi I'm the investment that I gave you and it's going to be some number of Enterprise customers who say Hey when's my project going to be live I'm going to be able to implement this system that makes a lot of sense okay very interesting and and then give me sort of a range here what's the average customer paying you per month to use this technology so really really small right now so we just just announced a pre-seed round last week and so we are we turned on our subscription system to begin accepting our first dollar from our first customer two days ago oh I love this is a perfect moment what was the size so how much did you raise okay so we raised 3.3 million on a preset got it and now listen your ability to do that at any valuation is really a hundred percent based on your ability to tell a story in the slide deck because you have no record there's no metrics to go off of yeah how good was your story what valuation did you raise that at okay so we raised that at an eight million dollar pre and so we negotiated the pre to be stable and an amount we raised would be the amount that we diluted beyond that yep yep yep yep so really it was 3 into 12 posts so you sold about 25 of the business yeah real real close to that okay that's actually pretty freaking impressive considering like VC markets are shut down right now right so what how are you close to Dan Kerr why did he lead the round how did you get that done uh well it's a couple of factors uh one of them is that you know breitcore was a very successful company it was well known and uh the property Casualty Insurance space and so because no he wasn't but but breitcore was originally founded in Springfield Missouri and I'm located in Kansas City Missouri and so regionally we're you know three hours apart from each other and I lived in Kansas City now um so part of it was they knew of the story they'd watched you know me from a distance for a while um another part of the story is that um there are a number of companies in the local Regional area here in Kansas City who are struggling with this exact problem right now and through a whole sort of like you know uh serendipitous series of conversations and circumstances uh some of the gentlemen from flyover happened to me in a room with some people at a big company that were trying to solve this exact problem they're like huh that's weird I just talked to somebody who's trying to solve this problem too and so you know that's dumb dumb luck on my part as much as anything there um and then I think also just you know trying to be able to put together a really thoughtful uh projection you know all of the the why now why this you know all of that so you know it's not my first time putting together a deck that a VC would want to see yeah yeah so what does in that projection you know towards the end maybe even in the appendix of that pre-seed deck what does it say you're going to test out in terms of the pricing to start okay yeah so at the moment we have um two SAS tiers there's a third saster coming uh next year at the moment it's uh professional in business or the two and so uh professional we're very much indexing off of other competitors in a similar space so professional starts out at about eight bucks a month per license and um professional starts out about 24 a month uh per license and so it's it's really um it's a very uh low price point low barrier to entry and that's by Design um because this particular space is one it's very crowded there's a lot of a lot of players here and you you can't come in and charge you know thousands of dollars for licenses where no one would use you but Phil break this down for us is a lot of my listeners right now that I've built side projects that have a good user base but either they're nervous to ask someone to pay they maybe don't know maybe their business person they don't know how to launch the paywall like you like to use a stripe like we actually launch people or there's other reasons they don't have a paying customer yet so do you just true or false you do have have you closed at least one customer yet are you still waiting to do that we have two okay so that's amazing I love that so tell us how you got tell name the customer but the first customer you closed how did it happen Okay the first customer I closed was a consulting firm who was trying to solve this exact problem they were implementing the software the same piece of software over and over again for multiple customers and they just had this problem and and I knew them through my own personal Network and they heard what I was doing they reached out and said hey I'd really like to like to launch this and so um to the point about charging a lesson I learned a long time ago in building Enterprise software is your software is worth what you say it's worth a lot of times uh early on and so if you tell people it's worth nothing and you offer a premium here then it's kind of worth nothing so so so so so that's something that I always try to just price it even with what's the value and did a lot of market research on what are people willing to pay what makes sense for everyone yep that makes a ton of sense um okay got it so so they now how did you close them though right did they say run a let's run a project for free for three months and if it works well then we'll sign up for a ten thousand dollar a month plan or like how did you get on board close close we actually did something a little different in our in our early group as we were in this initial build phase for the last 18 months um we set up some advisory boards and I strategically invited um some people to that Advisory board that I knew might be future users of my software number one because they're experts in the space and they know how to advise and guide the team on building the best possible tool and also because along the way they feel more and more invested in the tool and therefore when the Tool is ready to launch ready to be live they're the you know they're natural early adopters that makes tons of sense I see some people actually putting this on their P L's and what they call them as product roadmap acceleration fees and it's literally the right advisory the advisor says well what if you have this and you say well hey we'll sell you that but you got to pay this fee which is our product from acceleration fee okay launch it and there's Revenue I love I love there's an acronym for everything it's nice and happy product p r a f prep crap there you go I need to add that to my projections so I know I know okay so you started coding this then it sounds like 18 months ago at the first line of code yeah we did and so we did an angel round then and um the way we did that was I so again I'd exited my previous company sitting on uh you know some capital and so uh my wife who's also a co-founder in the business and I um we we funded the initial uh 18 months of Runway how much did you guys put in yourself we put in 500 000 ourselves that make you nervous to start no not at all I have 100 confidence I I know what we're going to do but give that context I mean for for to a billionaire 500 Grand is nothing to someone that's a college student 500 Grand is the world right so give us some context for you is that like all your savings or was it a smart race yeah yeah no no yeah that's probably that's fine five to ten percent of the total amount of liquid Capital meaningful but if it fails it's not extremely exactly fine exactly yeah I can afford for it to fail yeah everyone's different see some people they won't have success unless they put everything in then they they're forced to make it work other people don't like that stress they want to take a five to ten percent risk like what you're doing and that's how they do it um interesting okay so have you already spent that 500k uh yeah we spent that and that was well technically there's another 50 000 or so of that left but I mean right now we raised the seed round to proceed around on purpose because we needed to do that to accelerate yeah yeah okay that angel round you raised in 2021 how much was that for so that was that was the amount I just said the 500 000 that was oh oh you were 100 of the angels we were the well it was us and the other two Founders kicked in a couple you know ten thousand dollars I see I see I see okay got it so that was like pre-precede uh yeah truly Angel truly an ID on a napkin at that point yeah yeah yeah did you put that in I mean since it was your money and you controlled the the the paper I mean was that a convertible note no actually we I I really am a fan of straightforward Equity deals um for a lot of reasons um which we won't get into in this time frame but uh I I really liked that and not only that but I did not ask for any sort of a ratchet or leverage yeah so um the way we set it up um there's myself my wife uh kui Tim hoja and another gentleman Aaron salaf who were the founders there's four of us and the two of us kicked in the cash we took 50 of the equity the other two of them uh really brought a lot of additional engineering uh gravitas to the table and they're fabulous and so we gave them the other 50 of the equity that makes tons of sense okay but you're pricing the round here right because it's your own money and it's price so what valuation did you come up with for yourself so that would have been 500 000 for the company at that point in time so sorry it would it would have been a million for the company uh 500 000 for the fifty percent sorry a million yeah yeah yeah that makes tons of sense that makes a lot of sense I love this origin story okay so there's four like co-founders you your wife and two folks helped a lot on the engineering how many folks are full-time on the team today okay so today there are seven that are full time uh so we hired uh three more full-time in this last month uh but we also one of the things that I've done and I think it's really powerful uh shift since I started my last company I was again 15 years ago now um there are all these uh subscription-based Services now that you can go ahead and subscribe to there's people like pilot that do your bookkeeping and Gusto that will do payroll and HR for you and corpnet that'll do compliance and so part of how we're able to do that is we have about 10 different Contracting firms that are managing different uh value streams for us that you would have had to have hired for full-time you know 10 years ago and now you can run after a couple run me through a couple of those yeah so so so one of them so let's let's go uh bookkeeping is pilot um compliance is corpnet um payroll when it's domestic us Gusto Pay Your Role when it's International is deal um we have obviously legal support through Lowenstein Sandler's our law firms are wonderful there we have uh marketing SEO and all of that through a firm called tactica we have to spell that spell that tactica t-a-c-t act t-a-c-t-i-c-a tactica and is that like a Marketplace to hire marketing SEO people no it's actually a firm out of Kosovo and one of my co-founders is in Kosovo I have as meaningful engineering overlap in my previous company a large team in Kosovo and so it's actually an amazing place for startups and Engineering talent and marketing Talent uh going back and more Peninsula 25 years ago this is this is SEO tactica.com you see I love this is cool because so many great Capital position Founders now are doing this it's like five full-time and then 15 contractors the hard part is finding the firm to contract with the right firm the right firm right you can go through 10 SEO firms before you find you know SEO tactica yeah and then what are what are two other examples of that so do you have one for sales yeah so I do um we use Barnet strategies here in Kansas City um Chris Barnett was a uh he was a previous founder slash exiting sales leader Revenue leader for a couple of different startups that have been successful here in the Kansas City area left and decided to start his own firm doing sales and doing fractional sales and so his firm is helping support us on sale so for example we just set Salesforce up uh last month and his friends and helped us set it all up yeah interesting will he also give you like two fractional sdrs to take 30 calls a month third does he do all that yeah yeah we have a bdr function going there we have a direct Outreach function uh next week I'm going to a fairly high profile Sales Event he's coming with me there just so he can kind of learn how I pitch the product and all of that it's great this makes tons of sense okay are there any other what about development um development we keep totally in-house I I do not fully trust development to go out the door at this early stage and I'm really fortunate that in my last company it was a very engineering heavy firm and we had very strict hiring standards and we also hired internationally and so I have several hundred Engineers that were on my payroll before and 150 of them have reached out and said hey as soon as you can hire me please do that's amazing so yeah I've got a I've got a deep bench of Engineers I don't need the engineering Outsourcing for 10 years that's amazing I love this okay cool hey before we wrap up with the famous five so what's your try you know you just launched pricing you've got two those two customers what they're paying 30 40 bucks a month or what are they at uh no they're they're a few hundred a month a few hundred bucks okay so you're about to break call like a thousand dollars a month right yeah yeah that ballpark yeah what do you think you get to by the end of the year there's you know three four months left I would like to see us be at probably 5000 a month at the end of the year ideally yep yep okay well we'll see what happens there uh in the meantime let's wrap up with the famous five number one favorite book favorite book Thinking Fast and Slow number two is their CEO you're following or studying oh um I actually really really like the I think he's he's interesting to me he's different than me and I like that he's different yeah he's very cool number three what's your favorite online tool for building Dev stride ooh favorite online tool for building Dev stride I'm gonna pick an unconventional one here and I'm going to say pilot because the the ability to Outsource my bookkeeping has saved me an enormous amount of time yep yep yep most people are paying four or five six grand for a fractional CFO I imagine pilot probably comes in what slightly under that right 600 a month yeah yeah and they they'll do taxes too yeah you have to pay 2 000 a year for taxes yeah yeah it's amazing number four how many hours of sleep did every night three to five um how do you do that's not healthy or you're just how do you do that um it's Starbucks fair fair okay fair and what's your situation well we know you're married but do you have kids yeah I have a 15 year old and a three-year-old who I love dearly and love spending all my time with you're very busy okay and how old are you I'm 42. 42 last question something you wish you when you were 20. um it matters more who you know than what you know hmm I love that all right guys there you have a debstride.com is first company bright Corey bootstrap for seven years ago about a million in revenue and said you know what it's time to put the pedal to the metal he went out and raised a bunch of capital grew to 5 million in Revenue then 20 million Revenue then left the company then recently sold he used a bunch of that money 500k him and his wife to put into the new company debstrie.com which is helps you manage agile practices to report out to key stakeholders like your board management or customers that care about the next product release he just launched his paywall which we love he's got folks right now he's got about uh what seven seven full-time another call it 15-ish contractors 3.3 uh pre-seed round raised at a 12.3 post sold about 25 of the company but really focused on now scaling up to five grand a month by the end of the year we'll see what happens all right thank you so much for taking us to the top thanks a Time Nathan one more thing before you go we have a brand new show every Thursday at 1pm 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 back-end dashboards their expenses their revenue our poo 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 p.m 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 their 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 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 nathanlacka.com forward slash 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 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