Digits Revenue, Valuation & Funding (2024)

[00:00] Folks. My guest today is Jeff Seibert. He's a serial entrepreneur and one of insiders top 100 seed VCs. He's created products that were acquired by Google, Twitter, and Box, and Angel invested in more than 60 startups and started the Netflix phenomenon, the social dilemma. His newest company, digits, is revolutionizing business finance. Jeff, you ready to take us to the top? [00:17] >> I'm ready. Looking forward to it, Nathan. [00:19] Alright. What's more fun, exiting to Google or starring in a Netflix show? [00:24] >> Oh, man. Both for very different reasons, and I'd say neither were expected. [00:30] >> I sat down for a nice two hour interview back in 2018 and had no idea I would be front and center in the trailer, in the movie, etcetera. So what a surprise. [00:40] That's amazing. Okay. Working on digits today, we need to capture some of your backstory. So let me put this in a point in time just so everyone can relate. How old are you today? [00:47] >> I am 36. [00:49] When did you launch your first company? [00:51] >> I launched my first company back in 2008. So I guess when I was 23 or so. And that was a tiny startup called Increo. We ended up raising money from DFJ. We ended up getting acquired by Box in 2009 as the first acquisition Aaron Levy ever made. And so that was a quick run, but learned so much in that journey. [01:10] And and be honest with me there, financial windfall for you were not really more of a good learning experience. [01:15] >> It it was a learning experience except for the fact that Box went on to IPO a decade later. And so Did get stock? We did. It was an entirely stock deal. And so in retrospect, it panned out. [01:28] That's hysterical. Okay. So it's a 100% all stock deal, maybe at the at the at the price at the time, not exciting, but then you look back and go, if you held, that felt really good. [01:36] >> Exactly. And I not only held, I still hold a lot of the shares today. So I've been riding it the whole time. Did you do you have [01:43] any interesting any interesting takeaways? Or, you know, a lot of people will look at the VC path and you've now gone through many cycles and invested on the other side. If you're only optimizing to build like a happy, healthy life and you wanna be in SaaS and you want, you know, $10,000,000 to $20,000,000 bucks, many people would argue mean, look, fair enough. I would argue you have a better shot at bootstrapping and building a $15,000,000 to $20,000,000 dollar business than [02:06] you do doing what Aaron did, is dilute yourself down to sub 5% IPO time over a decade long period and deal with all those stresses. From your vantage point, do you agree or disagree with any of that? [02:16] >> Today, I agree with you. Back when Aaron started Box, it was a completely different world. It was very hard to convince these companies to adopt quote cloud, quote SaaS. Right? They were at the forefront at a lot of this. And so I think he took the path he had to to build the business. But today, you're right. I think it's a different world. And if you have the opportunity to bootstrap a business, I think you're in [02:37] >> great shape. [02:37] Very interesting. Okay. So that was your first deal. And so sorry. Remind how old were you when that happened? [02:44] >> That then I was 23. [02:46] 23. Okay. So what did you skip right out of college or skip college or what? [02:50] >> Yeah. Right out of college. Basically, senior year, my co founder and I just failed to apply to jobs. And so we started working on our own stuff. Got very lucky to raise a small seed round, $500,000 seed round, terrible terms, honestly, looking at it from today's point of view. But it was enough to get started, and we hired a couple engineers and built a product. [03:09] That's amazing. Okay. So and Increo then exits to Box. Do you stick around Box, learn a little bit, or no, you get bored and leave? [03:15] >> Yeah. No. I stayed two years. They made me an engineering manager and sent me to Boston to launch their r and d office on the East Coast. And that was a fascinating experience. Sort of first time in a management role at a bigger company. Had a great time building out a team out in Boston. And that's where actually the idea for Crashlytics came from. And so I ended up giving notice of Box and starting my next [03:36] >> thing. [03:37] So Crashlytics was launched in 2011. I think you would have been what, '26 at this point, '27 now? [03:44] >> Yep. '26, I think. Yep. [03:46] '26. Okay. And what was the original idea behind Crashlytics? [03:49] >> Yeah. So it turns out mobile apps crashed. So if you think in 2011, you're we're two years after the the sort of launch of iOS apps. Right? Those came in 2009. [04:00] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS 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 it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:24] your Stripe account, you see your valuation real time, you can see what it it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're [04:48] gonna get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna 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 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 [05:10] 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 founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe [05:35] you're going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right. We're gonna go back to the YouTube video here in a second, [05:57] but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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. Alright. Let's jump back [06:23] into the interview. [06:25] >> Everyone's building apps. The app store is flooded with reviews. 10% of them mentioned the word crash. It was a very unstable, very early platform. And I became obsessed with crash reporting through my work at Box because we were facing our own internal issues with our mobile work and our Mac OS work and ended up building a prototype on the side. And I asked Box, hey, can I work on this nights and weekends? Would that be cool? [06:49] >> And to their complete credit, they were like, yep, great. Go for it. It's totally unrelated to Box. And if it's good, maybe we'll use it. And so started building Box. [06:56] And they let you own the IP that wasn't tied up in your IP and employee agreement with Twitter Box. [07:02] >> Exactly. And that's what I asked them for. And they let me own it free and clear. That's amazing. So, yeah, huge props to Box and Aaron for doing that. And ended up, of course, the side project gained steam, got more interesting. And so ended up giving Box many months of notice, had a smooth transition out, and then started working on Crashlytics full time. [07:24] It looks like you had, what, ten, eleven people participate in the seed round in 2011 at Crashlytics. Did Aaron write a check into that? Did some of your former bosses write in checks into that? [07:34] >> Not at the time. Aaron did join as an advisor after the seed round, which was great. But yeah, we ended up because we're in Boston, we wanted to really raise from the local ecosystem. And so we got a group of 10 Boston angels to seed it, which was fantastic, as well as a local firm there called Flybridge Capital. [07:52] What was the market like in 2011 for that for a seed round? Was it was a five cap out of the question? [07:57] >> It it was. Yeah. We raised one on five. That's exactly it. [08:01] Oh, okay. Good. That's great. [08:02] >> And so, yeah, that worked well. Of course, again, in today's language, crazy different world. But we were very happy with it and we ended up building the team. And then it was a very quick story, basically fourteen months from launch to being acquired by Twitter. [08:18] Yeah. Now Flybridge participated in the one on five in 2011. That's also convenient. They look at your monthly updates. They go, Jeff, please let us lead your lead your or at least be involved with your A. You raised five on in the A round. What valuation was that at? [08:30] >> Oh, man. Ancient history. I think around '18 or so. [08:36] Okay. And was this crazy? Was this like a like a 50 to 100 x revenue multiple? Do you have real revenue at this point? [08:41] >> We had we had zero revenue. The product was free. Of course. Of course. Alright. And so, yeah, Crashlytics was all about scale. So we launched, we got very lucky with timing. We ended up going from zero to 300,000,000 devices within the first twelve months. How did [08:58] you do that? [08:59] >> Went viral through developer ecosystems. And so we had built this tool. It saved developers a ton of time. It told them in under two seconds the line number of code they needed to fix. And it just spread like wildfire across mobile app development. And so that's what really got Twitter interested because all of a sudden we had built a device footprint larger than Twitter's in just twelve months. [09:20] Interesting. [09:22] This is Okay. Fascinating. So so Okay. Got it. So that led to that growth. Now Twitter acquired the business. Correct me if I'm wrong here, but I believe it was in 2013 around for around a $38,000,000 deal price and mainly was that mainly stock as well? [09:35] >> It was yeah. It wasn't 38. It was over a 100. Well over a 100. [09:39] Oh, okay. Okay. [09:39] >> And that was mostly stock. Yes. Okay. Their motivation was, hey, mobile's obviously the next big thing. We need a mobile developer platform. Twitter had recently made a mistake and sort of killed off a good portion of its API platform. And we were sort of brought in to reinvigorate that and lead it going forward. [09:58] Interesting. And when you look at sort of Twitter stock price, like over time, right, did you end up sort of holding there just like you did a box or did you sort of get out as quick as you could? [10:08] >> A mix of both. Okay. Took some off the table, held some. [10:12] Fair. Fair. I was gonna say, 2013 I mean, even today, six years later, 2013 Twitter stock price at $69.70 bucks if you timed it exactly right, was a great sale considering it dropped to what? $17.15 in 2017, something like that? [10:26] >> Right. Exactly. And I don't know the exact thing, but I blended the whole range. [10:29] Yeah. Like a smart like like your accountant and your financial strategy people would probably recommend. [10:35] >> So Right. Right. [10:36] Okay. Very cool story here. So you then take money, you take earnings from them. Do you go directly into digits from Crashlytics? [10:42] >> So, yeah, I stayed four years at Twitter. In 2015, they named me head of consumer product. And so that was fascinating, basically moving over and leading the core app development and the core product efforts. Took off from Twitter in 2017, finally took a vacation for like nine months. And then we got right back together and started building digits. [11:02] Well, hold on. You skip over your coral fascination and your production credits. Yes. How are you balancing these things on the side along with your your you know, the wine company? [11:14] >> I have I don't know. I love just being involved in really cool projects, And these are all more from the investor side. And so one of my good friends from college is Jeff Orlowski, the director producer of Chasing Ice, Chasing Coral, and now The Social Dilemma. And so was just honored to be involved super early in those projects. I'm a huge climate change advocate. And so that was really fun to sort of see the development of [11:36] >> those films and start learning about the documentary film world. And then, of course, that ultimately resulted in an interview around The Social Dilemma. And that just was a fantastic success. You never expect a documentary to have all that many viewers. And now over a 100,000,000 families have watched it on Netflix. It's truly unbelievable. Interesting. So that was really cool to see sort of in the interstitial period right after Twitter. [12:01] I mean, this for me, for you, this isn't accidental. Going from zero to 300,000,000 accidentally MAU at Crashlytics, going from, you know, no viewers to a 100,000,000 viewers, like, accident. I mean, there's something you're doing here that it's my job to, like, decode for everyone else. So let's try and think about that in terms of digits. What is digits today, and how do you go from zero to a 100,000,000 MAU accounts maybe as fast as possible? [12:22] >> Question. So we started digits with the goal of building a real time finance dashboard for small businesses. So if you're a business owner today, the story hasn't really changed for decades. You have no choice but to hire an accountant or bookkeeper, and they're going to do your books each month. And two to three weeks after the end of the month, they're going to give you your books. And it's basically a PDF or an Excel sheet of [12:43] >> your profit and loss, your balance sheet, etcetera. And that process really hasn't changed. And the challenge there is you're now waiting, right? Two to three weeks after the month, I'm not worried about December, I'm worried about February. And so if you compare that to the product side and what we had with Crashlytics, this was literally real time to the second insight on how your app was performing. And you have Google Analytics, you have AB testing tools, [13:06] >> you have all of these real time dashboards. Why doesn't that exist for business? So that's the premise for digits. Of course, way harder to build than it sounds. And so we've been basically in heads down R and D mode for three and a half years now. We started the company mid twenty eighteen and we are approaching some big launches this year. So we're really excited how the products come together. And you asked about distribution. I'd say [13:31] >> one of the key things is we focus. We did the same thing at Crashlytics. We focus more on distribution than on the initial first product. It's basically how do you orchestrate, how do you engineer getting it into this market and having it spread. And so Crashlytics was hard viral. We were likely one of the first developer tools to think about virality. And when a developer started using it, they actually put it in their app and we [13:59] >> broke their build in the nicest way possible so that every other engineer on their team would find out about Crashlytics and then start using it. And so, of course, we're not going to break your accounting, but we think about it in similar ways with digits. How do we build viral workflows into the end of month close, into you sharing a report with your investors, into you giving maybe your head of marketing access to just the marketing [14:21] >> spend? If you think about finance from a viral lens, it gets really interesting. [14:26] And why hasn't QuickBooks thought about it this way? Why hasn't FreshBooks who have their mouse trap with invoices? Like, why haven't some of these players thought about this already? [14:35] >> That's a really great question. I think you'll need to ask them. I would say both of those products started a while ago in a different mindset with different teams. Right? Like QuickBooks has had 80% market share since 1992. And so, they've started to innovate a little bit more recently, but I think they are very much grounded in some of their earliest approaches and we'll see what we can do to outrun them. Mhmm. [15:00] Okay. So I'm on your pricing page. It looks like you're you guys are pre revenue, pre launch today. [15:05] >> You have a wait list? That's correct. Yes. [15:08] Okay. So talk to me about how you funded the business. You can't obviously operate for free for four years. [15:13] >> Right. So we are fortunate to be very well backed. We raised a $10,000,000 a round from Benchmark in 2018, right when we started. And then we raised a $22,000,000 b round from GV. [15:25] And when was the b round? [15:26] >> That was oh, man. 2019. [15:29] Okay. And tell us a little bit about how you look, obviously, you're gonna use your past. You have a lot of experience. These guys are gonna see you as someone who's a repeat founder, but how you package your story is critical to getting those deals done in the most non dilutive way possible. So how did you package yourselves? [15:45] >> Yeah, I think the key is to really show the size of this space. These financial products are absolutely massive in revenue and in market cap and so on. And so showing the big opportunity here, showing that we're in this for the long run, we have seen the short fourteen months, like start and sell and sorry story. Like that's not what we're going for here. We think we can be a major player in this space for decades [16:10] >> to come. And I think that story resonates with these investors. And they've seen that Wayne and I can execute, build a team, build a product. And so now we just need to go do that in this market. [16:20] And do you guys do anything crazy in terms of dilution? You know, most folks series a are selling, call it 10 to 20%. Same thing with series b. Were you guys sort of in those ranges? [16:28] >> I'd say slightly more advantageous given our background, but yeah, roughly in those ranges. [16:32] Fair. Fair. Okay. And how did you how did you approach negotiating evaluation since, like you have to point to some metrics? Is it literally like we wrote this code, it's now like we're moving forward? Do you have You don't have MAUs yet, right? [16:45] >> Right. Yeah. There's no MAU yet. There's no revenue yet. It's pre revenue. Those are honestly my favorite pitches because you can really focus on the vision. You're not sort of weighed down by like where it is today. We're really focused on how big can this be? How great can the solution be for this market? And what the investors need to do is talk with business owners, talk with people in these spaces and feel their pain and [17:11] >> validate that opportunity. And then I think you can sort of connect the dots and see that, yeah, this is a very large market. [17:17] Party rounds are hot. You did one. You've got I I asked the Aaron question because now you got them back on board with a check-in your party round. How did you structure the party round? And you have, I think, forty, fifty people in this thing. How did you did you build a funnel with 300 and then narrow down or how did you build it? [17:32] >> This was this was a stressful process. Yeah, we had 72 angels in digits. And these are the CEOs of Box, it's Aaron, of GitHub, it's Nat, of Twitter, it's TikTok, etcetera, etcetera. And it was really built from our network through Crashlytics of people who had seen, heard of the product, met the team. And when they heard we were doing something new, honestly, we were honored that so many wanted to be involved. It was definitely a process [18:01] >> to make room for folks to sort of coordinate everything. But we really viewed it because digits is targeting small businesses. We wanted as many supporters of the startup and small business ecosystem in the round as possible. And so that's what we've been really pleased with the support we've seen from our angels. We're gonna start using them to get out to market as we launch. And so, yeah, really honored for their involvement. [18:25] Why not include any like one to many folks that have relationships with accounting firms already in the party round as a distribution hack? Or did you do that and I just don't see them listed here? [18:36] >> Yeah, that's a great point. I'd say in the Remember, this was our first round. This was back in 2018. So we were really early on strategy and everything. And this was all through our immediate network. We are talking with a lot of those folks. So Very we'll see going [18:52] cool. Okay. If folks wanna check it out, they can go to digits.com. It's best for CFOs listening to go check it out. Is that right? And accountants, not founders directly? [19:00] >> Yeah. If you have a head of finance, CFO, accountant, anyone in that space would love to chat with them. [19:05] Alright, Jeff. Let's wrap up here with the famous five. Number one, favorite business book. [19:09] >> Oh, man. How to Win Friends and Influence People. [19:11] Number two, is there a CEO you're following or studying? [19:15] >> So many of them. I would say oh, I'm really interested to see what Parag does at Twitter. I know him well. I'm psyched for this. [19:24] >> That will be that's that was a big change. [19:26] Number three, what's your favorite online tool to as you build digits? [19:30] >> Wild card answer, Whimsical. So Figma's great. That's been awesome. But I'd say Whimsical is really cool for flow planning. [19:38] Do you use Plaid? [19:40] We do. Yes. Any feedback there? Have you always used them? Did you switch to them? Are you liking it? Not liking it? [19:46] >> We we've always used it. I think it's they're probably one of the best in the space. I obviously have there's pros and cons to them, but I do respect what they've done in the industry, and I think they're in a now increasingly strong position. [19:58] >> Yep. [19:59] Number four, how many hours of sleep do get every night? [20:01] >> Six and a half. [20:02] That's fair. Alright. And situation, Jeff? Married, single, kids? [20:06] >> Married, no kids. [20:07] Married and no kids. Did you meet her what was it the scuba diving or the wine club? How'd you meet her? [20:13] >> We actually met back in college, so it's been a long time. [20:16] Fair. Okay. So she's she's seen you evolve through all of your all of your interesting startups. [20:20] >> Yes. Well before any startup. [20:22] Very cool. Okay. Already got your age. I believe 36 today. What's something last last question. Something you wish you knew when you were 20. [20:29] >> The importance of distribution. So without question, and Increo failed. The re like, the reason we went and got acquired by Box was because we didn't have the distribution we needed to raise an A round. And we didn't spend that focus. And so that's why we have been so obsessive with Crashlytics and the films and now digits and so on on that. [20:48] Guys, there you have it. Jeff with digits.com. 30,000,000 raise to date coming out soon here. We'll watch closely, mainly focused right now on getting the product right and setting up distribution hooks to make sure that when growth is turned on and revenue is turned on, that churn is very low, stickiness is very high, and virality in that K factor is way above one. He knows what he's talking about. He sold many companies before both the box [21:07] and Twitter, spent time at both of them, owned stock at both of them. It'll be eager to see what happens once that paywall does go up and those things do turn on at digits.com, helping accountants manage books much more efficiently than in the past. Jeff, thanks for taking us to the top. [21:20] >> Awesome. Thank you so much, Nathan. [21:24] 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, they try and do a deal live and the founder shares back end 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 1PM [21:49] 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, 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 SaaS world, whether it's an acquisition, a big [22:11] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS 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 [22:33] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty 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 [22:52] 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.