FormPiper Revenue & Valuation (2024)

hey folks my guest today is brad parker he helps retailers automate their financing via his company form piper.com he's your 20-year veteran in the pet retail space now again helping those retailers identify the proper sas products to grow their business brad you're ready to the top let's do it so just be clear this could be like someone in kentucky that runs a little miniature shop that sells fish for example and you're gonna what do you mean when you say help them find the right software to automate their business well we start with the financing aspect of forum piper so if you're a retailer selling high ticket items typically you'll have more than one finance option you use to present uh options to your customers so we streamline that application process and since we've last talked we've we've kind of turned it into a retail management software where they're going to be able to aggregate their data and look to see which lenders are providing them with the most revenue which employees are running the most apps who has the best approval rate who has the best close ratio so you can actually turn the financing aspect of your business into a division of your business and to just to be clear what you did here i believe was you acquired a company a financing company that did about 120 000 per month because they took a one two percent back end fee on financing to pet retailers is that accurate that was actually our own company so it was where i actually started in the space and then as we grew we saw that there was an issue we would we would sell somebody financing and they would never use it so we would call them why aren't you using it well i can't teach my team how to do it now i have four lenders it's too many applications so what we did is we built the solution to aggregate that all of those lenders into one app to really streamline the process so now as we sell financing to our retailers you see them immediately using the product because it just goes right into their ecosystem and selling finance to your retailers might be if someone walks into a pet shop and wants to buy a 4 000 tank for their fish you could say the rep at that store could say hey you know and it's powered by foreign piper hey why don't you make 40 payments of 100 bucks a pop over the next 40 months and we can finance this for you yep that's a good example yep and so if you add up all of the loans you approved in the past 30 days the equivalent of the four thousand dollars that i just described for the water tank how much gmb is going through your platform monthly monthly i'd say right now about probably 15 15 million that we track that we actually represent you know and then in my system if you're a retailer and you're using lenders already you can plug your own lenders into my system and still use the system and we don't actually track that revenue or get paid for that revenue so you know the last time we had talked we were doing about 100 million in revenue that we represented um so i was kind of playing with those numbers now we're close to about 150 million in revenue through the lenders we represent but we're probably running about 300 to 350 million in transactions through form piper for our retail so you sit on data that's worth 350 million bucks of loans done of the ones that you are directly attributable to and you're powering it's about a half of that 150 million annualized that's correct are you still taking about one percent of that that's how you make money yeah it's on average about one and a half percent yep okay one and a half so yeah one and a half ago obviously 100 what 15 million a month that's what 220 000 a month in revenue there um it's close to that yeah and so is that your only model right now are you selling the sas stuff now too no we still sell the sas products so our initial plan when we work with the retailer is to educate them on our sas product and that's going to range anywhere from 1500 to 3 000 a year right now our average customer is paying us about 225 a month for the software so once they have our software we plug all of their lenders into the platform and what we do is we identify their lender lineup and look for gaps so if they don't have a near prime option or if they don't have a good subprime option we'll introduce them to the people that we use and then we'll add a lender to to their portfolio of lenders 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 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 the secret evaluation 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 frowner 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 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 raised 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 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 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 see so is that is that flat fee on top of the one percent you take that's correct i see and last time i checked you had about 90 customers how many today so today we are up to 150 customers but 250 actual locations got it so average of 1.6 locations per per per brand yeah i'd say most of them are still single operators and about 60 of our customers are multi-store and then we have several that are going to be that have 10 or 15 chain we are finding uh the the data that we track is more important to the multi-store operators you know so they've scaled to a point where they're driving huge success they have 10 locations so being able to see an aggregated approval percentage for their entire um in like their whole book of business has been really huge so the smarter the operator the easier easier it is for them to purchase our product and 150 customers or brands paying 200 uh what 225 a month that's like what another 34 000 bucks of mrr uh mrr's up to 45 45 45 just on sas just on sas yeah so last time we were talking we were at 18 and so now we're at 45 so we're up about 150 percent since that's that's incredible is that your fastest growing revenue stream faster than the percentage gmv model or now yeah the the financing it's a much slower roll you know because obviously the number is much bigger but we have grown that about 10 to 20 since uh we last spoke okay so just be clear when you add both revenue streams together on a monthly basis you're doing about what 250 000 a month in revenue that's correct yep that's incredible and still well no no wait did you raise a precedent round or not nope we're still bootstrapped that's weird why do i have a note that you raised a precede right did you do a secondary early on at a 4.8 million post money evaluation in 2021 nope weird i wonder why i have that okay so great still bootstrapped um and a founding story here seoul founder or what are your co-founders look like my co-founder is ryan munson so we started the financing company together seven years ago um a marketing company and then we merged it and created form piper about three years ago now i love this you're like you guys are the kind of founders that like we should be celebrating on like newspaper headlines and stuff it's like a niche category you're eating your own dog food it's what i call sass plus or sas plus gmv from the financing business you're building a beautiful moat here how many how many pet retailers are there in the u.s well that's that's the tricky thing there i wish there was a lot more so you really only have about 200 pet retailers that our product would fit for in the market and we have about 60 of them um and then so what we've been doing is focusing in the furniture space and the furniture space you have about 40 000 retailers that fit our model um so you know our goal is to bring value to that space continue to learn it and really kind of scale up and our goal is to get to a thousand furniture retailers over the next couple years a lot of people when they talk about buy now pay later they think of like klarna they've probably seen online right they're buying a thousand dollar whatever stereo on amazon and amazon says pay with klarna and payments clar and i imagine also will do like furniture and stuff but i think you're a unique example where a very niche player can beat a multi-billion dollar evaluation company because your niche so if i'm a furniture store why would i choose to be powered by form piper versus klarna on my lending options the issues with things like klarna is it's the four payments right so they're approving everybody they've divided up into four payments so if you finance something that was five grand you might still not be able to afford the 12.50 payment right so in a furniture business we're typically able to offer customers a 60-month payment plan so now all of a sudden their payment's under 100 bucks 100 is very manageable over a period of time where 1250 is not you know so the furniture store is going to spread their financing options amongst a prime option near prime and a couple subprime options so they have different approval and different products for the type of customer that's walking through the door so with form piper they're able to diversify their financing options for their customers where if you were just using klarna you'd get a lot of approvals but you wouldn't have a lot of transactional you know things happening because it's just too expensive and then payback period-wise you just said you can have our 60-month option is karna always 12 months i think it's just four four payments you know so i don't even think it's 12 periods what period though i think it's really short it's like 60 days or like 90 days it's oh it's it's a really easy yeah you have a massive cash flow advantage in terms of what you can offer the consumer it's way cheaper monthly cash flow wise and this is how consumers shop right they're shopping based on the monthly payment that they can add to their budget you know so you need to be able to have products that can get that payment as low as possible so when i ask myself how you a much smaller player with less resources than klarna can build a sort of moat like this or an advantage to sort of stick it to the man and start selling their market share i would argue this advantage of your ability to do 60 day paybacks comes from you very smartly negotiated your credit facility with whoever your banking partner is to allow them for you to have a blended sort of warehouse facility where your blended loan could be and have a payback up to 60 months is that accurate so like the the unique thing about my product is is we can work with any lender so they're not my lenders right so i represent 10 lenders and and we'll market them it's not your capital not my capital not my money you know so i can sign up a retailer and they could already have five lenders and then they could just use my platform to aggregate it so that's why we charge for the platform because i'm not always making money right so yeah my i don't want to be in the in the banking business loaning out you know hundreds of millions of dollars i'd rather somebody else do that just give me a piece i guess so so actually why is that i mean why why not go raise a 200 million dollar semester doing a founder path right we could either be a marketplace or we could actually raise the money ourselves and do it why not go right you have to d the hardest part about this is the deal flow you have all the deal flow that's true but i also have very strategic partners in the spaces that i work so if i came in and competed with them then they would say well brad why are we paying you to come in and compete right so i would have to choose do i want to represent companies or do i want to be the company and then if i put my own financing product into my sas product now i'm competing with all of the 60 lenders that i have in the platform so for me it just feels like a conflict of interest um it could be wrong that's fair that's fair in the future but yeah it's not on the let's say let's say you were one of a furniture company that pays for your software 200 bucks a month um you show them six of your friends who are lenders as options and you drive one of your friends a financing on a thousand dollar couch your friend is going to bill the customer over 60 months whatever 1500 bucks so they're gonna make a 500 spread over 60 months you can calculate an irr on that it's way higher than the one percent you're making right so at some point isn't the margin like the ability to capture that margin just too irresistible i mean it can be but you know find it it's financing as a challenging business right so you gotta you got a lot of people who default everybody's not gonna pay you right so you have to know which bucket of people to approve what are the merchant rates you're going to charge the retailer in order to execute and get that done then you have to have a whole ecosystem of collections and just it's i mean it's just a whole other business you know and it's i really like working with retailers and helping retailers drive success if i was in the finance business now i'm working with consumers i'm working with the end product and i did that for 20 years in retail and loved it and it was great you know but since we last spoke i actually sold my four retail businesses so i'm just focusing on sas working with retailers and it's just a much easier place to live i love that of the 40 000 furniture retailers in the us what's the total purchase volume annually you cross off 40 000 oh yeah there's no telling i have no idea to be honest with you it's i'm sure it's obviously an ability it's in the tens of billions i'm sure yeah i mean it's massive yeah that's i want to figure out what 1.5 of that is that's your opportunity right what's what's the potential grab out there you know that's right that's right okay this is very cool um and so uh give me an update on the team how many folks will time today right now we've got uh nine so we've got two founders we've got six sales people brought in uh ahead of csm uh so that's the internal team and then we're still outsourcing our dev team um to the same same company we were working with last time yeah which you've done very nicely here was called it's called maker software i always look for good dev shops you're happy with them still oh yeah it's fantastic just 24 7 service i can get them on the phone anytime talk about brainstorm everything they put together for me is fantastic and how do you interface like do they talk to your furniture owner companies put together specs and actually deliver the ui ux and the code to you um they wouldn't actually talk to the customers so we do all the talk to the customers we have all kinds of outlines we work on 12-week sprints so we have a laundry list of things that we're working on to improve our systems and processes and we're just always itemizing it and continuing to evolve it i know the last time we talked i told you we were about to launch our third iteration and then we were going to go into just chill mode that was not correct like now we're going for our generation we're developing more than we've ever developed and the cool thing about that is you know we're just getting feedback from our customers what are they looking for how would they like it our relationships with our lenders are getting stronger so we're doing more api connections and so when we launch the next version it's going to be really really sweet and just be a real turnkey system to help retailers just crush it yeah this makes so much sense um makes so much sense how are you getting furniture retailers to return your phone call well the good news is is they're retail businesses so they're open and so they have to answer their phone during hours of operation so yeah we're just i mean we're just always on the phones you know got the sdr team they're all making 100 calls each a day calling into retail businesses just trying to get on the phone that's the number it's 100 calls per day yep how many sdrs again three so you're doing 300 calls per day and how do they how do they find the 300 phone numbers like people to call oh you know we were using a company called task minions to scrape the internet for us and find leads um and then what we've done recently is we contracted with seamless ai so we could enrich those lists and then also build lists inside of their system in order to give my guys the best chance to get in touch with the right people and is that system working now we just launched with it so okay so it's task minions to get the list and then it's seamlessly to enrich the list and then your sdrs three of them daily we'll use that in rich list to call people and try and close deals that's it that's great how many furniture brands did you add new customers last month last month i think about 12. okay interesting so so your folks are making 300 calls a day right times caught 20 business days a month they're making 6 000 calls and closing about 12 months per month so my goals are so that the goals are for them to book 30 demos and that's what they do on average so 30 demos a month we see 50 of those demos show so 15 demos per sdr is showing and we're closing 35 percent of those so on average what we're doing is bringing on about 15 new clients a month from outreach that makes a ton of sense yeah so 15 new clients at 200 225 rpoos i mean that's 3 300 of new mrr which obviously compounds over time you can obviously that feels like the economics on that make a lot of sense most of our contracts are being done annually now i'd say probably 90 and we're closing those in the furniture space around fifteen hundred to two thousand dollars depending on how many locations they have yeah yeah that makes a lot of sense i mean that's forty thousand bucks of cash flow monthly right if you're closing fifteen pot uh two grand a year pop that's that's exactly what our goal is yep yeah yeah that makes a ton of sense so what's um i mean what right now what is there anything i mean seems to have your ducks in a row here is there anything keeping you up at night no no sleep like a baby you know who else is doing this is there anyone else doing this we definitely have some competition in the space um you know i feel like when they built their technology they were finance companies thinking about it from a finance perspective so they do a great job working with finance companies uh but i'm a retailer and so i understand what the business needs um and so my system is built to be agnostic from a lender perspective so the retailer can choose what lenders they want to use run them in the order they want to use them but most importantly it goes back to that data i was talking about right like if you want to move the dial in retail you have to know which sales people are not performing well so if you have somebody who's getting approvals and they're not closing those approvals you have to train that person on how to sell right and so my system will tell you the close ratio of every single sales associate that you have so when i come in i can look at my scorecard and say all right i need to work with jim and todd today and teach them how to close the sale because they're not converting yeah so from a retail perspective i believe that our software just helps the the business owner the sales manager the sales team just really drives success and you're still pretty profitable you told me last time sixty thousand bucks a month in profit 140 000 a month top line yeah so i pulled those numbers up so right now uh last year we ran 18 percent profit across the board with 34 growth and then this year we're at 20 profit with 37 growth and that doesn't include adding back you know mine and ryan's salaries so that's awesome that's freaking awesome man this is what what if this is like i just want to like make a newspaper and put you on the cover just to say you know sell to millions of people this is the kind of stuff we should celebrate so congrats on congrats on what you built well technically you have a newspaper it's in the phone so you feel free to put me on that cover anytime i know we've got we've got we've we've got these bad boys coming out we would love to actually where are you based i mean just north of atlanta interesting yeah we've got a big event september 1st down here in austin texas we're just featuring bootstrap satisfiers who are killing it i don't know if i can convince you to come down but i would definitely put you on stage if i can get you here i would come but i i fly out to italy that day ah what about what about march 16th next year we'll have to follow up that's our next big conference i definitely put you on stage i'll make it happen i'll make it i love that yeah it's in new york march 16th just stick a software on your calendar because this is just a fantastic story and i can't wait to see where you're going to be in 6-12 months yeah that's great that sounds great be right after this is amazing all right let's wrap up here quickly with the famous five uh number one favorite book uh right now it's the 12 week uh year 12 week here number two is there a ceo you're following or studying um i think he's the ceo of his own business so chris smith he's dropped the conversion code i'm just all i'm focusing on right now is trying to figure out how to get people to call me as opposed to me calling 100 people a day and number three what's your favorite online tool for building form piper um my favorite tech right now is superhuman i don't know if you've heard of that but that email plugin is just unbelievable it's changed my life with email number number four how many hours of sleep to eat every night eight and situation married single kids married no kids no kids and i think you maybe had a birthday 41 now four sorry 42 43 43 43 okay two birthdays very cool last question something you wish you knew when you were 20 i would tell myself just to be a little bit more patient yeah it all comes with hard work more patience form piper hell of a story here launched back in 2019 um basically helping pet stores retailer brands help them give their consumers options to buy the four thousand dollar fish tank they now go up but there's not a lot of those locations in the world let's go into furniture stores to do the same thing how can we help furniture stores look at all the different lending options they can give their consumer so they can sell more thousand dollar leather couches right so that's what he's doing they're processing over 350 million bucks of gmv annually right now across again pet retailers and furniture brands of which 150 million they directly attribute to their form piper brand which they take one to two percent of that's basically a 200 000 a month revenue line right there and smartly he's now getting into sas he's building software tools to build the operating system for furniture brands for retailers for pet retailers that's doing now 50 000 a month up from 14 15 000 just a year ago so really healthy growth all boots dropped and profitable which we love brad thanks for taking us to the top all right it's a pleasure 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 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 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 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