OnBoard Meetings Revenue, Valuation & Funding (2024)

Introduction hey folks my guest today is paroon shada he's the co-founder of passageways now called onboard and he leads its business strategy as ceo he serves on the border on board uh big brother sister of greater lafayette indiana university from simon cancer center and tech point he was a founding member of you we can.org and as an angel investor in several technology companies today onboard powers over 12 000 boards and committees across north america emea and apac prune you ready to take us to the top absolutely pleasure to be here so how does this work how do you automatically build board decks you know the idea here is take an analog process of you know collecting all the different sections that show up on the agenda and automate that in a way that makes uh you know assimilating that information easier so we provide a platform that allows more collaborative board information uh building as well as you know provide an environment to get the boards to engage in a more meaningful way we feel board meetings are transitioning from analog to digital in fact you know through covet uh you know also to virtual so all of that provides a great opportunity for us to look at the entire process and streamline everything for the best results for the boards and what companies pay you for this uh to use this for their boards on average per month so you know uh on the lower end it's about 5k a year uh some larger clients of course you know fifty two hundred thousand dollars a year you know several six figure clients as well what is that what is the customer on the page the most don't name them but what do they pay you what's your highest acv uh 170 000 uh you know you can imagine big hospital systems university systems where there are lots of different boards and and what enables you to drive up that price point do you upsell based off number of seats number of people on the board or is it feature upgrades or something else yeah so our uh it's usually the number of entities so think of a big large corporation lots of subsidiaries lots of acquisitions that they've done that entire governance structure uh and providing oversight of that we have built a platform which allows you multi-board access and that's how we drive up the cost it's number of users and and then there are suites so for every board you may need different set of you know software uh packages as well and then what is in the software did you have to basically rebuild zoom from scratch the whole video infrastructure are you licensing okay yeah so how what's the software i'm glad you asked that question so the the general idea is you know board meetings are a legal record you know they can always end up in discovery so the goal here is to give you a chance to build the board information really well and use as much of the plumbing that the internet provides as possible so single sign-on using octa or one login integration with zoom integration with you know all the different document management systems and video chats and all of that that's all built in but our goal is to give you a secure way to uh you know provide information distribution to your boards and all the underlying committees as well by the way there's a lot big committee structure often that comes with the board and then running the board meeting um in a way that the platform stays in the background you're discussing what's important what's relevant to to your board meeting and then also thinking about how you can get very smart about it so analyzing the you know engagement pattern if we publish your board book five days in advance this is how much time people took to you know to study that what if you change that to seven days looking at that analytics and then all the other uh pieces that come along with uh you know board interactions so board assessments uh dno questionnaires that have to be filed by uh you know public companies uh any action uh you know minutes and and voting all of those different pieces they all stay in one purpose-built application which is not just secure also limits your liability in case there's ever a lawsuit that's filed it's all in one contained system okay the software is clear to me i understand people pay for this now how many customers you have paying Currently serving 2500 customers uh we have about 2500 paying customers uh on the onboard platform we also just acquired a company by the name of escribe they're in the public sector meeting uh you know space so think of counties and cities and you know government organizations where there are a lot of open meeting laws they are focused uh you know they're based out of toronto uh focused on canada and u.s for the moment but they also have customers in australia and new zealand as well was that was there cash involved in that deal or was it mainly stock oh that was a cash deal as well oh wow how did you decide what the price was for that was it sort of multiple on revenue or something else yeah so we just took funding uh nathan so jmi invested in passageways there was a valuation on the table we'd done the due diligence on the space this looked like another company which is relatively similar to us uh and you know high growth so similar multiples that you know apply to our deal i guess what was that can you mean rangers and like 5x ar 10x error or something else oh 15 to 20 a.r.r yeah you know 20x multiple okay and you just mentioned you raised capital to help fund this deal Raised when did you raise capital last uh about two months ago we raised 100 ml 100 million from gmi from gmi yeah interesting okay and we're getting ahead of ourselves a little bit because i want to get a bit of the back story when did you guys launch so we launched about uh nine years ago um on board product and currently i have we are adding about um you know 100 or so customers between onboard and escribe every month so there's a lot of recency to our momentum 2500 customers but a good 1500 of them have actually been added in the last you know 18 months and we are coming in you know we are still picking up momentum uh can i improve can i do that math can i take 2500 customers times that five Monthly recurring revenue thousand dollar acv i mean you guys are doing about a million north of a million a month now correct our acv you know across you know if you look at everything is uh you know closer to 10. i see so you're doing more than two million a month in revenue yes yeah okay very cool when can you break three million a month what happened this year in revenue so 36 million dollar run rate with some luck it'll probably happen you know q4 q1 of course there's luck involved in all of this uh certainly uh the goal here is to you know we are uh the highest ranked application in apple's uh app store g2 crowd captera every single online review the best board software that's available in the market up against some legacy providers so i don't see any reason why this will slow down any time so and if you're at about two million a month right now in revenue where were you a year ago so we can calculate growth oh we are north of 50 growth for uh you know now four years in a row of course it was you know uh more than 100 growth four years ago but we continue to stay north of 50 and the goal here is to continue to stay at that pace uh for the next three five years you remember what year you passed a million dollar rent rate oh that was a while ago this is a tale of two products but for onboard may have been um i would say uh 15 2015. yup okay makes a lot of sense there so so obviously nice growth let's try and unpack this growth for a second is there a sales model how many sales reps do you guys have so we have uh i'm gonna talk just about onboard that's the most relevant piece um you know between aes and sdrs about 35-40 people how many carry a quota uh 15 or so and how do you set that up a lot of founders struggle with this what's the quota on target earnings ratio so um the the well you know half a million is a good way to think about it you know we go by sas uh industry standards you know uh but you know um people are selling in the enterprise segment of the market you know obviously they carry you know different quotas than people who are more on the transactional side smb site when you say 500 000 that's the quota target for you'd say as a good average that's the that's the average quota that i have in mind and uh you know again uh uh you know varies by individual in the experiences and the sectors that they serve and with this sales motion would you credit most of your growth to this or is there something else we're missing here no i think this is great actually this has been big part of the story uh you know there are some partnerships go to market partnerships we've tied up with you know vertical partnerships these are people who are well known there's some exclusives involved here icba which is independent community bankers of america agb which is you know the the organization that works with universities uh and so on there are several such partnerships but we also have on the lower end of the market there's a trial led product led sales motion which is sort of you know a self-serve aspect which is sort of you know the sub five thousand dollar deals how many new trials per month do you see happening right now about 150 and then you convert about 50 of those into into paid is that right uh we are right around the 50 to 60 range but you know a lot of those trials are qualified for uh you know um there's a you know demo and all of that that lines up later so um pure self-serve is probably a lower number uh so it's a it's an aided uh trial is what we do now one of the things i love that you've done is you're not just chasing like more money like like you see these people raising every 12 months they're getting diluted like crazy and then they have to exit the vista at like a silly low valuation because they lost all their leverage you only raised i think before 100 million 5 million in 2018 is that right that's right so been very you know careful about this just because we wanted to prove product market fit and repeatability you know coming off of last year where we had good 600 plus sales in a single year this was a great time for us to go raise a serious round and really build for the future and what when you raise 5 million what valuation was that at in 2018 that was at you know 30 mil so this is you know we've done uh you know quite well in the last three years are you passed a half billion dollar evaluation at this point with the 100 yet but you know we are working towards it no i think that's that's the goal by the end of next year maybe you know next 18-month goal would be uh half a billion months you're a smart guy you're not going to give up 100 million worth of control without taking some sort of secondary how much of the 100 million was secondary to you or other early employees or investors there were some involved that wasn't the focus there was some acquisition capital and you know there's some liquidity i've been doing this for a while but you know earlier investors but most of it is accurately for building the business okay i mean can we quantify that was more than uh 80 million going on to the balance sheet of the business and less than 20 years less than that but you know those those details are not uh not been shared yeah okay it's valuable information though a lot of people don't realize as a founder when you hustle like you've done this is a great way to create liquidity especially if you're doing like a big private equity round so so nice job there hey we're out of time this is a great story we want to keep following you let's wrap up with the famous five number one favorite business book uh favorite business book uh good to great is pretty awesome number two ceo you're following or studying um i'm an elon musk fan all the way uh not everything he does i follow though all right number three favorite online tool for building your business besides your own favorite online tool uh i'm big on loom these days number four how many hours of sleep do you get pruned uh going by the dark circles that you can see right here maybe you know six is a good night all right and situation married single kids married for last 20 years met my uh wife uh in my engineering days how many kids any kids uh one kid four year old so we got a late start to it wow okay one kid and how old are you so i'm 46 46 take us home something you wish you knew when you were 20. i wish i'd uh you know uh lots of things so that that threw me off there um i wish i knew the value of uh building uh the organization with culture as the central point guys there you have it on board meeting dot com it goes on onboard meetings plural.com they just passed uh call it uh two million dollars a month in revenue that's up from 1.2 million a month about a year ago so over 50 growth in the past several months they passed that million dollar runway way back in 2015 and he's done this in a capital efficient manner just five million dollars raised prior to their most recent 100 million dollar round flirting with the half billion dollar evaluation we'll see what happens over the next couple of years karoon 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 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 1 pm 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 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanlacka.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we 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Nathan's introduction to today's show hello everybody my guest today is paroon shadow he's passionate about building collaboration software that inspires and enables teams they're building the best board meeting experience through their onboard product and the most versatile employee collaboration experience through their employee portal solution called on assemble their teams are uniquely focused towards customer success and meaningful uh innovation they're based out of lafayette indianapolis london toronto and he lives in chicago prune are you ready to take us to the top absolutely hi guys so the company is called uh the company is called passageways and it sounds like you have two separate products they're both sas companies i assume Why Passageways has built two products for enterprise collaboration they're both sas products onboard is for board collaboration and ensemble is for employee collaboration and which one came first ensemble came first we've always played in the enterprise collaboration sandbox and we went from employee collaboration to could we actually keep going and the next adjacency was management meetings and then board meetings interesting so do the same let me ask you do most companies start with your ensemble How they have cross sold to most of their products product and then you upsell the onboard product afterwards or these are really two separate customer bases they are actually co-mingled we have a lot of overlap but there are several most customers have one product interesting okay but we see more and more overlap okay so just because of because it's such a short interview i want to dive deep into one of them which one would you say is you spend more time on which one does more revenue what's more exciting i think the board product is a great product to really talk about because most of the Why they launched OnBoard in 2013 audience is going to be ceos running companies talking about raising money and you know uh been board meetings okay let's do that so so on board so this particular product uh what year did you launch it in we launched it about four and a half years ago okay so we'll call it what 2013 2014 yep okay and uh and help us understand you know who you're catering to so i assume are the board members the investors paying for this or the company pays typically typically it's the company that pays uh the product itself is to remove the communication friction between information that the management team pulls together for often monthly board meetings sometimes it's not monthly uh you also have quarterly and all other variations available typically the software is used by you know people who pull together the board information um general counsel uh cfo ceo all those folks and then this information is made available securely through an online portal that's also available through every mobile app mobile platform like tablets and uh iphones and such and that's where board members and you know anybody else you know this could be auditors this could be you know your counsel that are outside they all have access to the information depending on their permissions and on average i'm How the average customer pays them $7k annually sure you have a lot of different customer cohorts but just for the second time on average what would you say the average team kind of pays for the software uh you know you could get started for uh about five thousand dollars a year uh it's per user uh but our larger customers about fifty sixty thousand dollars a year okay would you say maybe the average is closer to five or closer to fifty uh the ascb is like around seven eight thousand dollars oh okay fair enough so that's pretty typical by the way right you have a long tail kind of smaller and then you have you know a couple bigger ones that make up a lot of your revenue yeah that makes sense good um walk me through kind of the the the back story here so you launched the company in 2014 what was your background are you kind of ex-legal or x kind of board seat holder or why get into the space absolutely so uh when i graduated from purdue in 2003 i started the you know the ensemble product line with the team that we put together in lafayette indiana and we got really good at secure collaboration and communication in the enterprise space right around when the you know ipads came out which is you know april 2013 we saw that the boardroom access to information suddenly became very attractive on an ipad and everybody was trying to think about how what's the best way to dish out this information that's when we started the journey towards the boardrooms i started this company in the purdue dom room and it was good to see us actually get into the boardrooms eventually now we have some of the largest customers in the world using our product including some you know very uh amazing non-profits uh a supreme court in a country is using our product some of the fortune 500 companies uh some of the biggest banks and hospitals using our products so it's it's been actually really a gradual journey where we first learned enterprise communication and collaboration and then we nailed the use case and at this point i believe from everything that i see we are the most tech forward board room solution in the market okay and and try and quantify all this for me How they've grown to serve 1k total customers so this is four years and how many customers have you been able to scale to today uh we are talking about more than a thousand customers at this point okay okay i mean yes obviously fairly aggressive that's a lot um and what's the what's the process look like i mean how are you landing these customers do you implicate an inside sales team strategy or outbound or what it's a combination so most of it is you know about two-thirds of it is inbound and one-third is outbound outbound does have an sdr uh you know effort that we put together uh the teams based out of lafayette indiana and we also have sales offices in other areas including you know the names that you mentioned canada and uk being the main ones most of our sdrs are actually based on Why their team of 100 employees is based in Indiana, Toronto, and London lafayette indiana okay and what's the team size today uh we are right around 100 people at this point and in about 15 sdrs sorry you cut out their 15 sdrs [Music] yeah that's right and how many how many account executives does each sdr support so we have almost a one-to-one ratio on the sdr to aes and how do you structure how do you structure kind of their incentive plans is it around number of demos per month number of calls per month what is it yeah so the str's have to generate you know an x number it's between 10 to 20 sales qualified leads and they get qualified when the account execs actually accept that opportunity interesting at that point that's monthly that's monthly so on a monthly basis if you can generate about 20 sales accepted leads uh you know you're doing pretty good we win about you know 25 30 of our you know opportunities uh it really gets into definition how you uh define what's a win is for us if it stays in the pipeline for more than four months we kick it back that's great that's interesting okay great so 100 people 15 to sdrs they've got to get caught 20 sales accepted leads that gets accepted by the ae uh then i assume that moves to a demo and then obviously they're closing actually there's a often a trial and then closing but you know sometimes the in-house team and the corporate council often does a trial and then the management team or the board meeting may actually see the product in action uh every now and then you have a couple people who want to watch a demo yep of course and then um have you done this bootstrapped or did you raise capital uh bootstrapped all the way till you know we got to the point where we really saw that you know we needed to actually play for growth uh so i just four months ago we took some capital for the first time actually you know right after uh you know we got to about you know our main milestone was to have the visibility to 10 mil and right then when we raised money so that now we can actually you know essentially take the product globally Why they took on $5M in outside capital how much did you did you decide to raise an all-in at this point we are you know we have about five mil on the balance sheet uh but there's you know obviously some line of credits and such that are available after this did you do any venture debt as well or convertible notes or that's all just five million equity it's equity raised equity got it in terms of visibility to 10 million i mean we can kind of do math here a thousand customers at that 7000 acb puts you at Why OnBoard is doing $7M in ARR today about 580 grand per month or 7 million in arr is that generally correct that's generally correct for one part of the business yeah that's just one house yes yes yeah yeah so that's how that's where the basic math actually may fall apart but yeah we our goals you know the board product line is you know uh with some luck we How they have grown 65% year over year may actually be growing 100 next year that's what we are shooting for what was growth like okay so if you're doing again we're just talking about one side of the business right now the board product if you're doing seven million ar today what were you doing a year ago [Music] uh we grew about 65 70 this year uh i think we're right around uh you know 3.5 okay got it uh 3.5 million bucks an ar a year ago yeah okay well that would i mean if you're now seven million that'd be 100 year over year growth no i'm actually like i said you know the difference is the arr numbers which is the gap revenue numbers but we did grow 65 70 this year that's that's the ar growth that we saw yeah so just be clear then if we go back a year again i'm just talking about ar not gaap cash receipts annuals upfront none of that stuff go back a year november 2017 and that period you were doing about four and a half five million Why they have scaled from $4.5M in ARR 12 months ago in ar grew 60 70 to where you are today for the board business absolutely right yeah again the whole interview we're only focused right now on the board business um okay great and then what year uh what year did you launch the the uh the kind of the team management business the other side so the team management business is our legacy business we've been actively doing that even though a portal is a portal is what we've realized almost all elements of the communication between the board members and the employee collaboration are exactly the same we launched that in you know back in 2003 okay and we we do have uh uh 350 customers enterprise customers using that product oh that's great um How OnBoard is hitting 109% net revenue retention with 3% gross revenue churn annually focusing back on the board project here for a second churn is critical in any sas company what is your churn today actually we have been very fortunate with that our churns uh you know about three percent our dollar retention rate is you know um at this point i think we're ending the year about 100 and 809 percent okay 100 net revenue retention yes and when you say three percent churn that's three percent revenue turn per month or per year per year okay three percent revenue turn per year which means then you're expanding 12 to get to net 109. that's great that's healthy where's most of the expansion revenue coming is like number of board seat members or what pricing axes do you upsell against i think we we we see a combination of three we see some new licenses subscribers being added because of you know just boards expanding uh we also see some more committees being added so you often have an audit committee or finance committee coming on board and then you certainly have uh you know the upsell on the packages we have three packages you know uh essential professional and enterprise so we do see people actually just you know graduate to the next tweet that's great and you mentioned earlier your average acv was called seven grand so how aggressive are Why they are willing to spend $7k to land a new customer you going to get that customer what's your fully weighted cache on that account we you know at this point uh you know we're spending about a dollar to get uh you know about a dollar an arr okay so about seven thousand dollar cac to get a seven thousand account yeah yeah we are pretty aggressive you know we uh we're doing multiple things as soon as you get into global expansion your tax sort of gets out of hand so why is that your catch you do have a lot of overhead to setting up an office and you okay you know setting up new payroll a lot of legal costs that are you know one-time costs and then you certainly have the same for every country you go into you're establishing new marketing channels and all that so i think the costs are eventually they get caught up for the moment we know that we're there's no way we are uh you know same unit economics in our other geos you know us is obviously fueling all the main growth but we do see uk and canada being actually uh big engines of growth going forward yeah and then when you add up your kind of your whole business so look at your entire business over the past 12 months what percent would you say the board kind of product is How their overall business is doing $11M in ARR relative to your old legacy product we are two-thirds of the product of the revenue at this point is uh you know is uh you know projected to be bold product by the end of the year okay uh and one third is going to be our employee collaboration product okay got it so i mean if board today is doing seven and that's two thirds if we add another third so that puts you at what 10 or 11 million total are by both products is that accurate that's the projection that's what we're shooting for yeah okay well yeah i mean you gotta you must have a good idea you got about 30 days left i have a pretty good idea but you know uh what is interesting is most of my customer base is financial and the seasonality is off the charts believe it or not between now and the end of the year i'm going to do 40 of the year's business yep that makes sense 40 40 of the year's business because there's a lot of budget flush that happens at the end of the year these guys are planners uh you know and about 50 of my business is coming from the financial services industry yeah the other other verticals like healthcare uh you know are similarly seasonal uh but there are some businesses which are not seasonal for example nonprofits and higher ed they tend to be not seasonal high rate is seasonal but you know they are centered around the academic year rather than the financial year yep all right peru let's wrap up here with the famous five number one what's your favorite business book The Famous Five uh right now i'm really digging principles uh by ray dalio number two is there a ceo you're following or studying right now i love elon musk but really as far as studying i really love ratan tata which which company it's tadas in india what's the spell the company t-a-t-a tata oh ta is the company okay uh very good and then number three what billing tool do you use for your company uh we are still using uh books oh quickbooks wow okay number four how many hours of sleep to get every night i've been trying to get you know close to six recently you know i've been uh short on sleep i have an 18 month old at home oh wow how many kids just won just one and married and married yeah yeah you not the kid all right uh and prune how old are you uh 43 43 last question what do you wish your 20 year old self knew i wish i knew the value of having a really well-vetted and close-knit leadership team guys there makes all the difference it does have a close-knit leadership team again you guys heard it here launched in 2014 basically a board management product hyper secure share the board decks mobile tablet makes it easy typically people that are paying for the cfos the cros the ceos on these companies that are preparing the deck they've got over a thousand enterprise customers paying on average a cv i call it 7 000 bucks so about 7 million bucks right now in arr growing 60 to 70 percent year over year they've raised five million dollars to date three percent revenue churn per year that's gross they add back 12 in expansion so 109 net revenue retention annually spending a dollar to get a new dollar in cash so healthy payback period there of 12. team of 100 people based in indiana as they look to continue to scale peru thanks for taking us to the top absolutely thank you nathan