How FreeD Group CEO Kenneth Lee grew to $100M revenue and 70 customers in 2023.

guys join harmonycvm.com they help smart cities connect with local farmers to fill grocery stores with produce for example they make money on both sides of the equation last year they did 35 million dollars in revenue of which 15 million was recurring and 20 million was their take rate off their gmv which they did 20 million in gme in the last quarter they hope to break 100 million bucks in Revenue this year on the back of a major acquisition they just completed that 100 million will be split 50 50 between true recurring ARR and then sort of recurring gmv take rate on top of the business open to IPO in 2024 we'll see what happens totally bootstrapped which we love hey folks my guest today is Abel he's a dynamic and driven business leader with over years and years of experience in the technology travel and hospitality industry today he's the CEO and co-founder of free d group a Cutting Edge travel and lifestyle SAS company he's played a pivotal role in empowering Global Enterprises and government units to drive incremental revenue and Achieve success for customer experience able you ready to take us to the top yes so go ahead thanks Nick all right so the company website is freedgrouptech.com but the actual product is joinharmonycvm.com that's the product tell us what you're selling and who's buying it sure so basically we are a typical SAS company and but actually we're using a little bit different approach uh in comparison to uh typical SAS company actually available on the market so first of all one thing we created is quite different from others is the multi uh uh a merchant multi uh channel uh multi-platform uh capability to help sellers to create this kind of uh uh uh um it's combining actually with the CRM with the uh Harmony at the um which sellers though my audience doesn't know what sellers you're talking about oh which is sellers you mean you just said to help Sellers and people we don't know what sellers you're talking about not too much oh that the sellers basically actually quite wide range can be actually from uh product owners Distributors uh content owners then actually those actually the one that providing the uh the the actual uh uh um product covers from travel to Lifestyle to a consumer goods so basically anything that customers can purchase those are basically uh the uh those related Sellers and then on the other hand we also work with large corporations like telcos or governments and uh uh Airlines and airports anything that actually the concert they can actually reach to their uh large uh customer base uh customer base so you're a marketplace with sellers who are the product owners Distributors you know and travel lifecycle and customer Goods consumer goods and then you have the buyers like telcos and governments that are buying things like travel or other things exactly exactly whether one actually in the middle providing the solutions providing the uh the AI Solutions and data capabilities and so on uh to to link to groups together and how do you make money or taking a cut of a gmv or is there a SAS fee on one of the sides oh I have both actually so from the uh those big player sides we basically charge the SAS fee and from the distributor side the product owner side basically uh we earned a commission okay what's the commission typically like one percent five percent ten percent well that actually really depends on the market and also depends on the products I mean uh typically for example if we because actually we work with wide range of uh suppliers for all the merchants from different markets for example if it's in China uh the other takeaway is actually quite uh quite quite sad we're talking about below two percent but if you're going somewhere like Middle East or Europe then actually can range from uh between 10 to 15 10 to 20 percent interesting but when you look at total GMB for your platform over the past 30 days then you look at the total revenue you got to keep what is the effective weighted average rate you're keeping the take rate I always say around 10 10 okay around ten percent got it very cool and then going back real quick to the to the SAS fee which these buyers pay you the telcos the governments help me understand how do you charge them um so first of all we uh you just got a situation so we uh again we separate those into two groups they made the smaller Merchants the people who actually try to reach uh to uh to uh to to sell their product to different channels normally we charge them actually a very very small fee so to help them to grow to help them to actually reach out to a more audience and more customers it's small though 10 bucks a month 100 bucks a month uh we're talking about uh it could be like between uh between hundred dollars to uh to a thousand dollars at that kind of range and then there's a big guys out there so the governments or telcos or airports and stuff like that that could actually go from a hundred thousand dollars to all the way to seven million uh dollars per project that's basically the largest one we have which is a smart city project in Korea 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 evaluations inside of your founder 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 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 the the biggest customer you have today is paying you seven million dollars per year that's correct that's correct okay and it's a smart city project so what kinds of things are they using your Marketplace to access for the Smart City from the Distributors and Merchants sure so I'll give you an example um so before covet uh um so let's say uh it's a small uh a farmer outside so they can actually just drive their fried vegetables and drive their products to the city and sell it to different uh uh supermarkets or restaurants and because of coverage so that's actually being restricted so the government actually tried to do all kinds of things to help the small uh margins asset needs to actually to survive to create more different distribution channels for them to reach out to their clients directly so therefore we are the one actually building the entire system from end to end to help those as anes to distribute their products to different channels and help them to manage those as well and so on this ask me I heard you say that Merchants the farmer might pay a hundred to a thousand bucks a month but then the big guys the airports or the people doing the Smart City could pay up to seven million is there is it very obvious the majority of your revenue is coming from the smart cities versus the small farmers or what's the revenue split on the SAS fee side uh from the tax fee side one-time solution to you right now if you look at 2022 number uh those actually that so large corporations that takes about 60 65 percent and then the the smaller Merchants takes about 30 percent okay got it so if you're 2022 total SAS revenues 65 were the big guys and 35 were the small guys that is correct okay interesting and you mentioned one time fee obviously a one-time fee is not a SAS fee so are these people paying recurring monthly revenues uh they do Yes actually because actually the the guys who are paying the one-time fee normally uh so for our SAS models for example 80 of those actually assass components so that means ready to use and ready to launch of the market but because actually they're bigger guys so they more or less have they have around between 10 to 20 customization involved so therefore allow us to charge them a little bit higher uh like a one-time implementation fee or r d fee so therefore we uh that's what the the whole world variance come from yeah but if someone pays you a one-time r d if you have a million bucks that's a one-time fee it's not recurring Revenue so I mean how do you what what is your true recurring Revenue look like oh in terms of even if they pay one they pay one million dollars free they still pay us the recurring so because actually we are the one bringing them the merchant maintaining the uh the the maintenance of the website and doing all kinds of things behind on the regular basis so therefore we said we're still charged amount of maintenance fee so the seven million of the smart city was that a one time seven million one time only one time only okay so what I'm asking about is the SAS fee right so on a recurring basis what are these folks paying you on average per year per month okay so if it's on uh uh again smes they actually range from like under thousand dollars and the debate guys actually could be from five thousand to the ten thousand dollars okay got it got it got it and it's still 65 35 split that is right that is correct okay so generally speaking all of your customers on the SAS fee side are paying somewhere between 100 bucks a month or ten thousand dollars per month depending on where they are correct correct very kind of projecting above yeah yeah yeah very good okay that's very helpful let's now get your back story here when did you launch the company what year uh we launched a copy in 2016. 2016. okay do you remember how you got your first customer oh yeah okay I would never forget that one so actually for the first three years we're doing b2c so it's a travel related Hong Kong Taiwan kind of uh only operating our own platforms but actually pretty much like Tech driven so AI driven that's actually what you try to achieve and then 2019 we realized that actually what we're trying to do on the b2c side it's quite especially in this part of the market greater China area it's a suicidal so basically we cannot compete with the debate guys so therefore we switch the business focus from B to C to B to B so or B to B to C so that's 2019. our very first customer was Channel mobile and then Samsung so we're very lucky that we got those guys on board but actually it took a lot of efforts I always always remember the story it's a very similar trend for most marketplaces that are B2B today a lot of them start as b2c to build out the marketplace and then they layer on a B2B model which is what you did three years after your launch exactly okay now fast forward to today how many customers do you have paying the SAS fee uh right now globally uh we have about 80 70 80. okay 70 or 80 and then the other part of your business obviously is the gmv right the dollars flowing through the marketplace so the last 30 days how much gmv went through your platform um so last 30 days okay I I I I go for last quarter it's around it's around 20 million dollars 20 million wow so last year what you put about 80 100 million through the platforms yes okay interesting and you kept on average 10 so that's eight million of revenue for you last year just on that model wow okay that's pretty impressive I mean I guess you're doing a lot of Revenue there why worry about a SAS fee at all well because actually when you're creating a SAS fee that actually creates from the customer perspective you don't charge them anything actually that lowered the stickiness and then also lower the the Loyalty we find and then so when you charge them anything it becomes actually they treat the platform more uh you know available or actually take it more seriously they put more efforts into it because actually we when we actually generate that Revenue the gmv the tech rates the the revenue that a profit we get from that we actually do a profit sharing with our partners so therefore they actually that ended up actually probably making more money by using our platforms but if you don't charge that that actually the engagement from the customer side it could be lowered so of the 8 million the take rate last year which is your pro you know what you keep how much of that did you have to pay out in profit share that's already paid out that's okay so 8 million is your take net net correct correct I see okay very cool and then I guess we can look at the 70 to 80 customers paying a thousand to ten thousand a month I mean that is doing what I mean that's doing 100 150 000 bucks a month right there right correct okay and again the GMB if you're doing 8 million take rate for you that's I think what 600 650 000 bucks a month there so I mean you're you're getting very close to doing a million bucks a month in Revenue uh yes sir exactly that's exactly our uh how we're doing uh yes that's exciting and so if you're doing sort of 650 000 bucks a month from your GMB business and 150 000 a month today from your SAS business right that's uh 800 000 bucks a month today what were you doing exactly a year ago so we can calculate growth rate oh wow that's actually a good question so if you look at so I exactly a year ago actually that's a general so maybe I gave you the number from 2021 then so first of all actually or or actually a year before that so 2020 when we first started the uh to switch the the business model from the C to B to B to C uh so we only did around less than two billion dollars in Revenue in 2020 because actually that's when covet first happened we switched from travel Focus to non-travel focused so that's actually quite a bit of a struggle there it took us about two to three months start trying things again and then so that's another two media so 2021 we did about 14 million revenue and then this year so uh so we closed 2020 to 35 million oh wow congratulations and what do you think you'll do this year uh we are targeting 100 million okay and I guess how did you do 35 million last year is that take is that that's just your take rate right or is that GMB through the platform so that's actually the 110p plus rate of the subscription recurring class the uh yeah everything together I see so up to 35 million last year how much of like take subtract out the one-time fees so subtract it one time fee we are looking at uh so that's eight plus uh so for the around 15. 15. okay so so so 15 million of ARR last year plus 20 million of one-time fees correct correct I love this model because your one-time fees basically help you Arbitrage CAC right you get your you get your money back immediately basically well actually to be honest sometimes I'll be thinking why is the recurring piece so important because actually if the customers for we will basically look at the contrary value if the country event is about a million dollars if the customer waiting to pay us in advance we have no problem collecting it but in the market of course for the invest from the investor perspective they want to look at the long term so if we collect one million in the beginning or throughout three years for us it's not much of difference because we have the recurring uh the GID going on so we have the the recruiting Revenue coming in anyway so but because of the the investors prefer that way so that's why we sometimes actually change change the business model or commercial grade agreement a little bit Yeah so you're you did 15 million of recurring Revenue last year you think you'll double that to like 30 million of this in this year and then 70 million will be one-time fees oh no actually definitely have more actually we started focusing more on recurring because actually there's a several strategic uh uh uh uh uh movement that with the company did this last end of last year and this year so one of those actually we acquired two companies while it's in uh based in Hong Kong which is the largest TMC company for the greater in the markets um so they already have the recurring Revenue we're looking at uh they are I think their 2019 number this is a travel company so you can see so back in 2019 their Peak they were looking at two bit at Hong Kong dollar that's around 300 million Revenue uh alone gmv gmv they process ticket sales that is right that's right that's right and then they take around 10 to 15 of that so that's why I should get recruitment Revenue they only care about those kind of transaction recurring Revenue side so I think for us that's actually contributes big part to that part already plus they work with uh like over a thousand big guys in the market so we're trying to convert them into from a transaction based TMC company into a travel tech company so that's actually one of the Strategic movement that we did and then there's another company in Korea actually the same thing so we're hoping that actually with all those strategic alignments put into place will help us to achieve the the 100 million Revenue this year and about that at least we're looking about hoping that at least 50 of that ARR yeah that makes sense how much did you pay for the 300 million year GMC travel business uh can I keep that confidential but if you would like if you would like you can maybe if you can't give a hard number could you maybe just talk about how you thought about the valuation maybe from a multiple perspective sure if you that let's just say put it this way so for that particular entity we are aiming to IPO in 2024. so hopefully that actually gave us a uh uh of a minimal IPO we're looking at 250 million uh at least the evaluation yeah so yeah so did you guys have you bootstrapped this or have you raised capital uh no whip with strap oh you are but congratulations that's very exciting nice work thank you what all right it's painful experience but still how many folks are full-time on the team today right now for that particular for our company or your whole company oh 250. 250. how many are engineers um 62 60 okay wow okay got it so call that 100 175 something like that yeah yeah very cool great story let right out of time now let's wrap up here with the famous five appeal number one what's your favorite Business book uh the uh I like a number of them so actually from zero to one that's actually one of those and then actually I like I read the the CEO book um uh there's a book I did right there a lot so I tried to learn something from that every day number two is there a CEO you're following or studying actually this one here um I I read that the CEO Excellence oh yeah okay I like this one a lot yeah very cool okay that's a good one number three what's your favorite online tool for building joint Harmony CVM Harmony is one of those RCS it's one of those that's actually the one that we're using quite on a regular basis uh number four how many hours of sleep do you get every night uh around the average around five okay that's not bad and what's your uh situation married single kids I wish singles I swear as a bird that's awesome not married no kids and how old are you uh I'm actually 40. 40. last question something you wish you knew when you were 20. I wish I could start something already but back then instead of just you know goofing around guys joinharmonycvm.com they help smart cities connect with local farmers to fill grocery stores with produce for example they make money on both sides of the equation last year they did 35 million dollars in revenue of which 15 million was recurring and 20 million was their take rate off their gmv which they did 20 million in gme in the last quarter they hope to break 100 million bucks in Revenue this year on the back of a major acquisition they just completed that 100 million will be split 50 50 between true recurring ARR and then sort of recurring gmv take rate on top of the business open an IPO in 2024 we'll see what happens totally bootstrapped which we love Abel thanks for taking us to the top thank you 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 slash 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 counter those people we got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support all right I'll be in the comments see ya