How Naehas CEO Rab Govil grew to $40M revenue and 20 customers in 2023.

guys RAB launched his first company raised 15 million bucks of equity and sold it to RR donelly then went into about call it 2012 time frame launched nahas which is serving financial institutions helping them to launch customize offers to Consumers faster in a more automated way they broke a million dollars of Revenue in 2013 10 million in 2019 last year did 35 and today at a run rate of about 40 million bucks he's done this basically bootstrap caught 2 to 3 million raised early on investors today own 177% ESOP pull of 14% he owns the rest and he's really serving 20 specific Financial customers several of them pay more than $10 million per year so really deep not wide he has said though moving forward he' maybe look at the other hundreds of financial institutions with 10 billion or more in AUM we'll see what he does next hey folks my guest today is RAB goil he's the founder of multiple enterprise software companies including zen8 and nahas which serve some of the biggest brands in financial services he's got a Ms from Rod Hester Institute of Technology and computational imaging where he was the president's scholar he's also serves on the board as a board member at Al for all R you ready to take us to the top sorry AI for all R you ready to take us to the top of course of course very cool so what is nahas give me a customer story how's a customer use you so the best story we can use it is you pick any of the top 10 banks in the country when they want to send a new product create a new product or send a new offer to you we are the organiz we are the platform they use to create the new product or or pricing or a specific offer for a consumer it is approved in our platform the content for that offer is created in our platform it's delivered into the channel using our platform and then when a customer actually takes advantage of this product or offer we are the platform that manages whether they should get the credit once they've achieved their goals so a good example would be Ani in financial services an offer might be hey I'm GNA give you $500 if you instead of instead of a conceptual example I mean is there a case study you've publicly published that we can actually talk about a real example to help people understand what you do yeah of course so let's use uh Bank of America as an example okay right so when you're talking about Bank of America and as example they says I want to create a new product or a new offer right and an offer would be they would go to the market saying is hey if you open up a new checking account or you open up a new credit card account I'm going to give you um $500 as long as you open the checking account you move $10,000 into to the checking account and you connect it to your direct deposit as an example so somehow they have someplace they have to create the offer they have to create the content associated with the offer they make sure that the offer meets all the compliance requirements right then they have to deliver this product or offer into the marketplace and once somebody takes advantage of this offer then they have to make sure that you meet all those requirements before they give you the $500 analytics engine in the back which actually takes all the transactional data that's coming in evaluates it and then tells you that makes a lot of sense okay that's a great case study so you're focused on financial firms Banks you know especially some of the top 10 the top 10 banks in the world um help me understand what these Banks pay on average or any customer pays on average per month or per year to use your technology um it is literally uh I mean we are the infrastructure behind the customer experience so we have customers who pay us anything from a million doll to 10 million in AR okay so you have a couple customers paying you more than $10 million per year yes okay so so like two or three pay more than 10 million per year or is it just like one one one use case um no this is if they if they're using a variety of use cases on a platform right so a platform focus on Financial Services we have a variety of use cases on a platform so if a customer is using a lot of varieties of use cases it it it can be $10 million 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 287 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 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 founder paath dashboard this is all 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he talked about the zoom info IPO he specifically talked about his $100,000 accounts and his million doll accounts so if you look at if you look at nahas today and you look at how many customers are paying you not could pay you but are paying you million dollars per year is that above 10 yes it's it's almost all our customers pay million dollars a year okay so you you are a low volume high high high arpo go to market motion yes yes we we we are focused on the top 200 to 250 institutions around the world yep yep okay got it so how many I guess how many how many paying customers you work today we're talking a handful 1020 we don't disclose the number of paying customers at this time right to be able to do that because we are doing this but but you can assume right based on our Revenue that um it's it's right now it's in the tens not the hundreds got it and what's your Revenue today our revenue is close to $40 million in and where were you exactly one year ago so we can get a growth rate we are growing about uh about 20 25% year-over-year okay so you've doing about 35 million uh annualized in October last year yeah and and we are and we are also um um we've been um cash flow positive eida positive in the 20% range for a very long period of time oh that's a congratulations that's huge nice work yeah just clear that means you did about $6 million of profits last year bottom line okay wonderful are you bootstrapped as well we are I'm the main investor in the business in terms of doing this we have not gotten any outside we have any outside institutional investment we have some Angel investment but it's a very small amount I think we only raised about2 to three million and what year was that I was almost 10 years ago when did you launch the business what year um the business was launched about 12 years ago okay so 20 what is that 20 201 2011 yeah somewhere in that range I don't even remember specifically the date okay got it and then you rais two to three million in in a seed round back then most folks you know are selling you know call it 20 25% in their seed round is that what you did back then no we rais we raised very little in our seed round it was like $300,000 or something of that sort ah okay so so I think and then we rais a little bit along the way as we did this so so um obviously the investors own a very small portion of the business I mean what like 10 20% though right I think they own like um I think less than around 15 or S around 177% okay got it and and I guess were you already independently wealthy before this did you have an exit or something I've I've had I've I've done reasonably well yes I've done reasonably well um well what's your story though I mean did you have were you a really highly paid consultant or did you have another software company you sold or how did you build your I I've had software companies I've sold I did some Investments That kind of worked out reasonably well right so so over the years I've done well so that has allowed me to now invest in uh a few ideas that I find super super interesting yeah right okay that makes a lot of sense um I want to talk more about where you see the space going spe specifically for the financial institutions that you're working with I imagine you have a thesis on that before we do that though let's just fill out a little bit more the backstory how many years did it take you to break a million dollars of Revenue I think we were a million dollars in Revenue in year two okay so 2013 you did a million Revenue yeah okay do you remember when you broke 10 million I think we grew initially uh it was an interesting cash flow business right so we kind of grew um like we kind of grew about like 20 30% year-over-year for a long period of time right and the company just kind of ended up growing in fact the interesting story about this company is that until last year we didn't even have a Salesforce it was all Word of Mouth last year was the first year we actually added a sales Force well that's great how did you so teach us then how did you get your first couple of customers how did you hit your first million of Revenue I think we had we had one of our kind of the top four Banks kind of came to us right we were we were working on some very interesting software related to landing page optimization and one of the larger institutions came to us and they thought that the software could be used to really kind of manage personalization at scale and we worked with this institution to actually build out our first uh the first piece of functionality that they were able to deploy at scale and that allowed them to go from something like 800 offers to basically like 10,000 offers in the marketplace right so the so so the real story behind um this company is is generally financial institutions are very behind from a person personation and customer experience perspective rap sorry I just though a big bank doesn't just come to a startup and say we want to use you okay so you're you're making this you're I want to make sure you're not putting a gold ban on this and making it sound way easier than it was you had sold a company previously to R Donnelly back in 201 and 10 and it looked like you were already in this space a little bit did you already know this Bank from nimblefish yes yes I I I I I have had relationships with these Financial in some of these financial institutions for a little while yes yes so were they a were they a paying C customer at nimblefish um they were not a paying customer but they have heard about me at that time heard about us me at that time so they were looking for a solution and and they were very interested in the technology I was developing so what when I read the when my research team read the explanation of what nimblefish does it's very similar to what you're doing now just you're exclusively focused on financial you know the financial sector so if you were going to go right back into the space why sell Nal fish in the first place at all why not just keep building it great question so nimblefish was very focused on the production piece so this company is not like nimblefish at all right mean production piece like actually doing the content production of getting a direct mail piece out or an email out right like what Salesforce or something goes for right there's a huge amount of process ahead of the production piece which is like we are the system of record for products right we are the system of record and these institutions for offers we have the system of record for their compliance for their disclosures so we manage now their whole n2n process MH mhm right so it's a very different model right think about think about us being the Erp type of software for the customer experience yeah yeah right other otherwise these financial institutions would not pay the money they pay us just for the production piece okay that makes sense now you found when did you found nibble fish what year I don't even remember I think that was was somewhere in the early 2000s right I have I have 2004 but you're you should know better than me you know I'm horrible at dates right as as as an entrepreneur they seem to just blend together right I get excited about the businesses and I and I I I I I I don't even remember these uh these dates in fact uh one of my businesses just got like U some secondary liquidity Zen rate we did some secondary liquidity and I I've already forgotten I I should have remember when I have these big payouts but I I don't seem to remember those the exact dates how big was the payout um the payouts had been in tens of millions of dollars right and why was the right time why was now the right time to do a secondary at zen8 um we wanted to get like the the company's been kind of growing um 100% year-over-year it was it was important to kind of get the right um um set of uh Talent around the table that can help scale it to the next level I think I think the best way I explain this is my skill set is kind of the0 to 10 million right I'm really good at the 0o to 10 million range and then I think the people with better expertise that are kind of in the 10 to 100 million doll range so so for me sometime it's good to kind of bring investors along that can help you kind of scale to the next level and and generate are you're referring to the round that was done back in June right the secondary then yes you said that secondary there was tens of millions yeah I guess what's not being reported because a seedr there is being reported as a $15 million round by bition Capital so how is there tens of millions of secondary if the total round was 15 million that's the only thing we publicly have disclosed okay so Bish inp put more money on top of that that maybe wasn't published that was secondary for early investors and employees yeah I think I as I said right the that that that was the one we publicly disclosed okay got it and what is your I understand you're an investor there or I mean how do you work with the founding team over there I think Brian Brian's leading that company right yeah so I'm I'm at this time the executive director so I'm very much involved and I kind of help kind of Drive the product strategy there I'm just trying to verine near the math of how you as an executive director as a non-f founding member would have enough equity to be able to take advantage of a secondary to the tune of generating tens of millions I was yeah I I was I was the major investor until at that time right I was the majority shareholder okay oh so you own more than 50% of the company I I I still own more than 50% of the company oh got it so you you Brian wasn't really a Hired Gun then for you um he was he was he came in and and I canot and he was one of the co-founders and he had a portion of the company but most of the majority of the company was still owned by me how did you convince him to join you I mean if I'm Brian I'm going I'm going to go do my own thing I don't want RAB to own you know 90% And I only own 10 um because I have all the infrastructure in place to kind of build the product and uh and um the infrastructure and he could come in and just be the CEO to drive drive the business uhhuh uhhuh he he was also Co at nahas for a bit so was this a nahas spin out to some degree um he he helped nahas initially to kind of get um do some work and then he wanted to kind of go focus on my structure allows me to actually go out and allow me to go out and build new businesses as part of my overall structure so he ended up kind of wanting to be the co-founder and CEO of zenid uhuh uhuh I'm just I'm trying to figure out how someone like him I mean MIT graduate you know he was from Forbes sorry from Bank of America for many many years uh and uh I mean really well I just I'm trying to figure out how you convinced him to work for you with such a small Equity slug uh going into it and your answer is you just had a lot of the stuff already in place yes yeah interesting okay um all right well and I guess uh why was I mean you're already wealthy so why why do a secondary when Equity markets are generally compressed people would say that's pretty bad timing well I think in terms of doing this first of all we got uh a very good um multiple on the business right not not I'm not asking for your data but what would you consider generally to say a good multiple on a SAS business B2B a good multiple on a SAS business B2B I think Nathan it all depends on how uh how what the growth rate is of the business right if if if you're if the business is growing 100% year-over-year I think getting multiple in the double digits is not and it's it's reasonable it's all depends on the growth rate and how efficient is the growth rate yeah so I mean was Zen growing more than 100% year-over year y I see okay got it so I mean fair to say something between like a 10 and 30X multiple on that secondary yes I see interesting um just to be clear that is completely separate in terms of a product use case than nahas right yes it is yeah that's a simulation training platform do you sell that platform also to financial firms um we sell it for that goes across in multiple horizontal markets I see I see I see okay so back to so back to NAS so you break a million dollar Revenue back in 2013 um is your what Your First $10 million year is what 20 2018 2019 um the first $10 million I think um I'll have to look it up I'm not specific as I said the company kind of ended up growing about 30 to 40 between 20 to 40% year-over-year depending on what the year was yeah that that would put you add about a 10 million run rate in around 2019 I'm not pinning you to that but it's somewhere around that year right yes yes yes okay interesting and then I guess how have you where how are you growing the business today I mean this is such an impressive story that you've done this bootstrap people are going to want to learn I mean how did you get Enterprise clients so quickly how do you get individual customers paying more than $10 million per year so I think so first of all right um I mean you want to build such a strong relationship with Within These Enterprises right that they come to you with their problems right we didn't get to a $10 million AR business with one of our clients because we could just do one use case right the the trick behind this is if you solve the problem in in a way and they feel that you are a true partner of theirs right they will come to you with other problems they want to solve for you right I mean IBM at one time kind of created that Playbook right uh where where what was it saying right be before they lost their ways like you you you never got fired for buying IBM right so once you build this level of trust Within These large Enterprises and take care of them they will come to you to solve more more of the problems so then as an entrepreneur you need to decide are you going to build a vertical SAS company where you're going to invest more in multiple product strategies or you're going to go build a horizontal SAS company when you're taking one product out to multiple folks right so if you get your business model right and if you're going to build a vertical SAS company well then you need to be able to invest in multiple use cases and multiple products that go across uh the whole um stack yes stack Ty across the whole stack right that's that's the only way to do that so so partly I think it's like you pick the right business model once you pick the right business model then it comes down to is are you going to create the right infrastructure in place and stay true to your business model right your moving forward is going to be to go deep on your current 20 customers versus trying to go get 2,000 new customers well and get more customers like those right but there's only so many Fortune 100 companies there's a hundred of them well they are actually they're actually you don't have to go out to Fortune 100 companies right you when you go into a financial services space right you can go to companies as low as 10 billion in assets so we are not going after thousands of companies but there are hundreds of those institutions they're in the hundreds to a thousand institutions on a worldwide basis that are Market understood that's great I just realized I'm enjoying this so much we've run out of time so just some rapid fire quick stuff here fill if you can fill out the rest of the tap table here have you set up an ESOP pool for your employees or No Yes 10% we are close to 14% oh that's great you're generous 14% there investors 17% and you own the rest right yeah amazing okay and then you already told us about profitability which is great how many folks are full-time on the team today I think we have CL to 210 wow okay very cool this is great let's wrap up here with the famous five RAB number one your favorite Business book ah my favorite Business book um I'm trying to think is what was what what would be my favorite Business book that I have or the one now I'm not I won't call it the one I'm reading right now is my uh favorite Business book I think my favorite um Business book has to be uh uh the art of hiring I think I'm I'm trying to figure out who uh how to hire well I don't remember exactly the name of the book but um that's okay the art the art of hiring rapid fire ones number two is there CEO you're following or studying CEO I'm following or studying yes um Peter Glassner at Viva number he done an amazing job $4 million in uh capital and build uh I mean what an amazing story he is so he's he's probably the CEO I I I I Look to from a vertical sass perspective number three what's your favorite online tool for building nahas my favorite online tool for building um Nas is probably Google number I have if I have a specific site or anything that I go to number four how many hours of sleep do you get every night oh I got I get a good seven to eight hours and situation married single kids um I am I'm married with a with a daughter who just graduated proud dad graduated from MIT and she's working for a Quant hedge fund in New York City oh very cool very cool and how old are you I am 56 RAB take us home something you wish you knew when you were 20 years old something I wish I did when I was 20 years old or knew something you wish you knew you know um It's Never As Good As It Seems and it's never as bad as it seems like my my favorite saying to people is that reality will assert itself to acknowledge it early but most cases of building any company is learning to how to manage your emotions yeah it is because the world world doesn't change as much as you think it really changes guys RAB launch's first company raised 15 million bucks of equity and sold it to RR Donnell then went into about call it 2012 time frame launch nahas which is serving financial institutions helping them to launch customize offers to Consumers faster in a more automated way they broke a million dollars of Revenue in 2013 10 million in 2019 last year did 35 and today had a run rate of about 40 million bucks he's done this basically bootstrap caught two to three million raised early on investors today own 17% ESOP pull 14% he owns the rest and he's really serving 20 specific Financial customers several of them pay more than $10 million per year so really deep not wide he has said though moving forward he' maybe look at the other hundreds of financial institutions with 10 billion or more in AUM we'll see what he does next RAB thanks for taking us to the top all right thanks Nathan talk soon one more thing before you go we have a brand new show every Thursday at 1 pm. 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