OnBoard Meetings Revenue, Valuation & Funding (2024)

[00:00] Please help in welcoming Parum Shahada from onboard to the stage. Hello, [00:07] everybody. Yeah. I'm gonna actually walk you through, you know, what I would say probably the most unusual story here. We are all about bootstrapping, and I saw how many hands went up. I'm gonna walk you through going from bootstrapping to really getting to, you know, exits along the way, multiple bites of the apple, if you will, and still actually sort of maintaining, you know, the chance to make the dent that you're after. So Parun Chhata, Parun [00:38] right, rhymes with maroon. You'll remember my name now. We are in the board meeting business. So board meeting management business. Over the next twenty minutes, I'm gonna actually walk you through, you know, how we got started, you know, first product, really good success with that. And then, you know, went on to really kinda just monetize that through, you know, first, actually really took on debt to continue to bootstrap till we got to $15,000,000 in ARR. Along [01:07] the way, I had to clean up the cap table. There were some non performing co founders, if you will, that had to be managed. And that took a while. But at that point, I was able to take on some private equity money to accelerate the growth. And that drove the growth model. And then last year, we took a bigger check from a second private equity transaction. Since then, we've actually gone on to do inorganic transactions and [01:39] acquisitions. It's a big focus as well. So I'm gonna walk you through this. And trust me, you know, I am a bootstrapper at heart. I do wanna actually kinda just salute each one of you guys who's doing this. It's extremely hard to show the discipline. But one of the things that I realized that you could be a bootstrapper for a fair amount of time and then still get to be venture backed so you can actually see [02:01] the acceleration that your product or your space truly deserves. So this is a brief background of the company, the trajectory. I'll walk you through this. First off, I should say, you know, we started back in 2003. I've run, you know, the same company throughout. If you run into a problem that you can solve for the rest of your career, my advice would be to actually play the long ball and stay in it. Investors and founders will [02:26] come and go. You could still actually run this. You could still actually take some chips off along the way. That's one way to think about it. So our first product was an employee collaboration product, OnSemble. Off to a fast start. It was bootstrapped, got onto the Inc. 500 list, And we were making money. We were actually, you know, be able to, you know, take some distributions at the end the year. This was, you know, me and [02:51] my co founder. But there was one problem with it. In 2009, when the financial crisis happened, eight, nine time frame, every single one of my customers was either a bank or a credit union, which meant we came to a screeching halt when it, you know, came down to the sales cycles. So we had to think about what are we gonna do. At that point, we went from an employee collaboration product to a board meeting management solution, [03:18] which is now the only product I offer. Meanwhile, we continued down the path of taking the original product OnSemble and making it into a cash cow, which funded the business $2,000,000 to $3,000,000 every year. That money was plowed back into growing the onboard business. Along the way, my founders lost interest. Stuff happens. And we we had to find a way to really kinda just, you know, come to terms with how will I actually bring that cap table [03:47] to be unlocked. So I used debt, and I used some of the, you know, crude capital to come up with a schedule to pay him off, pay the second investor off, and then actually went on to, you know, really kind of grow the product through the two rounds that I've done since. So I'm gonna walk you through that here. So first, you know, first part of the presentation is about bootstrapping. The [04:14] number one thing you have to think about is actually the product itself. Everything else won't matter. Financial engineering comes later. Optimization comes later. You can think about everything else later and you can hire all of those pieces out until you actually nail the product. You won't really get too far with it. So if you're an early stage, you know, that's sort of, you know, what you focus on. The slide here is showing that we took a [04:39] while to get to the revenue numbers. At this time, we are growing 50% and we are actually fast growing. I would attribute most of that to the early stages when we were truly focused on the product. [04:54] I think not just the product itself and making sure that product is adding value, you also have to make sure that you're getting customers of the same kind. Because if you get seven customers, all each one of them is using it differently, you don't really have a business yet. Right? So to stay close to your ideal customer profile or to continuously evolve and fire the customers that don't belong there, this is the discipline that you have [05:19] to be sure about in early stages. Definitely feel like the only thing that I did very well was to stay. Every single one of those customers was a financial institution I just told you when crisis hit us, right? Well, we should have diversified, but frankly, it helped us build a product that was really good in a compliance heavy industry and eventually came handy to diversify elsewhere. I'll also talk about, you know, you know, I I often [05:51] talk about being able to explore and exploit at the same time. As a founder, CEO, you have to be ambidextrous. But once you find your niche, you gotta exploit it. And don't get distracted at that time to explore new things. Right? You still have to do some exploration because you have to think about what's next. But that's a pretty key part to bootstrapping well. I'd also talk a little bit about, you know, when we entered the [06:17] financial services industry, there were other verticals, other sectors that came open, healthcare, nonprofits. These are compliance driven industries. So we eventually went there and certainly used some of the equity that we had built in the financial services industry, know, publics publicly listed companies. All of these are customers at this point, but that going back to how we started in the financial services industry. Have 600 banks as customers today. And that actually kind of just gives you [06:47] a lot of credibility. I'll talk a little bit about that. And finally, you know, the product. The best growth hack will always be an amazing product. A product that actually wows every single user. And that's still the goal for a big part of the organization. This is sort of our board product. If you run a board and you want to be excellent in your boardroom delivery, it's an inexpensive product. It'll force you to think about your [07:18] board meetings and what you get out of your board intentionally. Most organizations today actually really are dealing with what you see here on this slide. Know bunch of different digital duct tape helping you get your board decks out and if you want to get intentional get really good in the boardroom which by the way has huge returns. Right? Your investors gain in confidence. You are deal ready all the time. Then you'll actually look at a product [07:46] like this. That was the goal. There are two things that drive us at onboard. And this is sort of, you you have to be that clear with your team. The first one is we wanna make sure that we build everything within the platform, everything that a board needs to do, not just the board book delivery, the board assessment, the D&O questionnaire, you know, CEO review, you know, all approvals, everything should be right there. Minutes routing should [08:12] be within the platform. So that's the first big heuristic that we are clear about. The second heuristic is we want to make sure that the first we call this FTUX. First time user experience is an absolute amazing one, which means when a new director gets your product, they should be wowed. We can implement our product within the same day. So if you had a board meeting this evening and you called us in the morning, we'll be [08:37] able to implement that and your director should be able to run with it and your first meeting itself will go off seamlessly. That focus is extremely important when you're building, you know, the product in the early stages. Once you do that, and that comes only that comes about only if you built amazing relationship with customers. Other speakers have talked about this. In my case, my first customer was also somebody who gave us infrastructure. We used their [09:06] office. They also advised a lot on operations side, how do you get compliance certifications and such. And eventually, they became my debt partner. When I talked about buying back my co founder, my first customer since this was a financial institution, they helped me figure out a loan which allowed me to buy back my partner. So you can get a lot out of your early customers. They are emotionally invested just like early employees. The question really comes [09:33] down to what are you going to solve for with them? They're your early board, if you will. In our case, lots of things came out came out of this. So for example, all our early customers became advocates for us to go sign up these partnerships. So what you're seeing here is partnerships we signed up in different sectors. There's one in credit union industry. There's one in the banking industry. There's one in the university space and so [09:57] on. So we've used a lot of customer credibility to sign up partnerships, which actually then give you more credibility in the market. And that's how you go about doing this cycle. So nail the product, gets the partnerships. At least in our case, it's a very vertical sales cycle that we have. So we are focused on lining up the partners for it. So I'm going to switch gears here and talk a little bit about where you need [10:25] institutional capital. So once you build good partnerships, you have a good product, you start to get into and in my case, there was debt to be paid off. Right? You know, there was debt because I'd bought back my co founder in the business and the other partner as well. Taking on debt, if you're married and there's whole family and the greater family, everybody's gonna be like, you are crazy. You should do something about this. Right? There's [10:48] all kinds of other pressure that comes at you. So I wanted to clean slate this if I could. That was the first reason why I thought I should take institutional capital. Secondly, I think, you know, taking on some capital allows you to really truly think about how high you could fly. Like in my case, opening up an office in UK, in Australia, in Canada. By just test marketing in a single salesperson to see if those markets [11:13] grow, which they have all grown by the way. We have hundreds of customers overseas now. Without institutional capital, it would have taken me that longer. Getting to really invest in the team, the talent density goes up astronomically after you've raised money, you know, with some big valuation numbers or big checks because people wanna come and work at your firm. And you are inviting your friends as well. So I think, you know, you really get a chance [11:42] to think about the organization that'll truly scale. I talk about building a championship team, and that's what it comes down to. You know, it's a it is actually important for you to have a top class revenue team, a real solid data team and all the other teams that you are thinking about. Being able to build that capital helps. Certainly, I think you realize when you bootstrap, you're growing. Your goal is to break even at a higher [12:10] and higher number every year. That's essentially what you're doing. By taking institutional capital, when you look at that business, which is fundamentally very solid and you pour in some fuel on it, you'll just see the acceleration happen. And I wanted to see that happen. So the first check was actually only $5,000,000 on the balance sheet. I did take some secondary off just to really kind of just ease the pain. And I'll talk about that a little [12:35] bit because it's been a long journey. And there were a lot of employees and myself, we were actually doing this for a fair amount of time. It allowed us to invest in the product innovation cycle. So ideas that were actually truly risky and out there, they often don't get funded in a bootstrap mode. Being able to take some of those bets who have the which actually naturally have the best returns, that was a key part of [13:00] it. So for me, actually, doing all of that, the first round of the [13:09] to [13:16] we're of customers, different clusters of customers in different verticals really allows you to be thinking about world class delivery, being the best platform. And once you've proven this model by taking on some capital, it gives you a chance to really kind of just do other things. For example, analytics on all these sectors, benchmarking, applying AI to all of this. These things are just not possible in bootstrap mode. The goal of being bootstrapped should be to actually [13:50] make sure that you have a model really well, but you should also keep an eye on when you've outlived that cycle because that happened. We wanted to do not just board meeting, but also other board related workflows, the annual cycle, assessments and such, skills matrix, ESG matrix, things like that. That required us to raise money. So when we did actually get to raise money, we raised $100,000,000 last year. [14:22] That's a significant check. I heard somebody say here. That's exactly right. Everybody around you will suddenly actually call you. Like, what the hell just happened? Right? But that is actually fundamentally, a moment of truth in your life because you realize you can pretty much do most things you've wanted to do now. Right? So I want to talk a little bit about, you know, how you prep for that cycle. And then, you know, why secondary was important? [14:54] So taking some money off was extremely important. I was just having this conversation with you back there. The team had stayed with me for a very long time. I wanted to take some real money off as well. When you really find lots of folks around you in your team have made their first 6 figure, 7 figure checks and they work with you, it will completely change the culture. You don't have to worry that there's a proven [15:20] culture of financial rewards, extraordinary rewards, outsized rewards that can happen just by being in that company. So people don't have to go work elsewhere. I think for me, it was actually also about getting to, you know, swing with a heavier bat. Right? You can really swing for the fences. So when you take some money off, personally, you'll feel I will actually change the way board meetings are run. What's the board meeting of 2030? Let me go [15:51] after that construct. So those are some of the things to think about as you think about taking on some money. I will say, fundamental thing before you raise money is to make sure that you nail the unit economics. It's just not going to scale if the unit economics are bad, whether they are your CAC or your payback period, you know, retention rate, all of those. So for me, the fundraising cycle was a very short one. It [16:22] was just a week and a half. [16:25] But all the work went in prior to that where, you know, the business was fundamentally solid. We knew that there was lots of market opportunity with Proven. The TAM was well developed. In fact, I spent, you know, no less than two, three weeks just working on the TAM analysis. The TAM analysis should be done extremely well [16:45] simply because big investments only come in big markets. So unless you have a huge potential, nobody's going to write a big big check. So think about that and spend a disproportionate amount of time just figuring out your TAM. I also prepped really hard as to what would be my growth thesis and the one that my then current board shared with me. So when I went out, I turned the question around to every one of the firms [17:10] I was talking to. This was a self run process. What would you do with this firm if you were actually partnering with me on the same side of the table in the boardroom? And I sat and I listened to what they had. And I got the chance to think about, you know, five, six, six really awesome takes. And then I could actually figure out which ones would be the best group to work with, where the culture [17:32] fit would be. So to build your growth thesis and to test it out, that is a golden opportunity to do that. These are the slides that are available in the key fob. They've this was literally just that's the deck. I intentionally kept it very, you know, to the point. You know, the overall business, the TAM and the market sizing exercise, how we get our customers, what's the go to market motion, proof points on why it's going [18:00] to be hugely accretive, And then certainly, you know, details about competition. How are we gonna actually outsmart and outflank everybody? Slide on the team. And then a slide that talks about what change we are after in this world. Right? And how would we actually change the way, boards operate? And finally, our unique, you know, selling proposition. Why us and not anybody else has the best shot in going after this? So once you do that, you, [18:35] in at least in my case, I should say, we got several term sheets. In fact, I should go two slides back real quick here. [18:45] You know, we ran a process ourselves. You know, the process piece is on the far right there. Number one, we were transparently talking about, you know, internally, hey. We're gonna raise money. We're gonna do this. Internally, everybody knew about this. Even the board, you know, helped in in in a working to that moment. Once we decided we're gonna go to the market, the deck was actually really nothing. The story kinda sold itself. You know, the use [19:12] of funds was the easiest thing ever. Actually, it's not there on the slide because I wanted to ask them how would you spend the money. That was a big part of it. We did have real, you know, slides slides. I only courted firms that showed a lot of interest. They were all using our product in their portfolio, so it made it a little easier for me. But in the meanwhile, investors that show true interest in you, [19:37] I remember CVC, they're they're a big PE firm. They helped me with the TAM analysis. I asked them, hey. I can't actually figure out how many boards are there in every part of the world. They literally actually gave me their analysts to work with them, you know, for next two, three do this. Firms will do that if they're interested in you. So that's a good way to test things out. But eventually, you know, I focused on [20:01] the fit and partnership, but I also actually had, you know, we are gonna close this round by next week. These are the terms on which you should actually, you know, give me the term sheet. So I only wanted down the fairway kind of terms. Terms are just as important as the valuation, in fact, if not more. So everybody had to give me their valuation based on our terms, and that was a key part of shortening this cycle [20:21] because we don't have the time to really kind of run a three month process to raise money. Right? The shorter the cycle, the easier it is for you to actually live up to the promises you're making. So when you do all of this, you actually get to do a lot of fun stuff downstream. Since we've raised money, these are some of the things that we have done, added a lot of talent, thought of what the product should [20:42] look like in the next four, five, six years. Certainly, we've done a lot more on building and supporting the exec team, running a board meeting solidly as you imagine. We've added an audit committee, a compensation committee, and certainly, recently we just added an M and A committee. We've started to do these acquisition conversations much more rigorously internally. Every two weeks we are meeting. This is the first acquisition we did. Essentially paid a multiple, which was certainly [21:16] at what multiple you raise your money. It's going to play into where you can acquire others. We wanna make sure that you are instantly actually accretive in these transactions. So think about that. If there are other companies that you wanna acquire downstream, what multiple would they trade at? That would give you the multiple that you should shoot for and what you could be comfortable with. I do believe, you know, working through, the COVID cycle was an [21:43] interesting one just because you couldn't meet them. That was a tough part of doing an acquisition last year. You really had to do this remotely most of the times. And then while we're deploying capital into onboard business, we also had to think about now integrating a team, 60 people team out of Toronto. That really tested us as well. So think about some of those pieces. The key lessons here, when you do an acquisition, which is more [22:07] than 20% of your ARR, it's gonna test you. You almost need to hire execs ahead of that transaction. When you go from a founder led organization and you try to digest that company, you'll have to change the incentive structure very quickly. The founders will likely make, you know, good money. Their way of thinking will adjust. They need a little time to adjust to the new context. But think about this. Every single employee in that company, all [22:33] their customers, all their partners, they all need to be really thought about ahead of the transaction. All of that has to happen in a very short thirty, forty five day time period. So we've realized that for the next acquisition, we've started to run this M and A committee really well. It's one of the most rigorous parts of my business now because we do want to grow inorganically. That was the whole point of taking on this capital. [22:58] So yeah, over in the last twenty minutes, I've twenty, twenty five minutes, I've spent sharing my story. These are the three important things to take away. First of all, stick with a niche. Niches will bring riches. Certainly, you know, I can attest to that. If you have 200 customers in the same vertical, you're gonna be more, investable than have actually being spread over lots of different verticals. Number two, when you want to actually explore, you know, [23:29] you want to actually first make sure your unit economics are right. Once you nail it, it's easy to scale it. And lastly, you know, if you stay in the game long enough, and I certainly feel like I I am doing my part on that end, you will find that the best in your field will wanna go become part of your journey. You'll be able to acquire a lot of these companies. A lot of these founders have [23:50] looked at you for a while. So the goal here is to play long ball. And if you do that and add that, you know, and add being excellent in the boardroom, which we can be good partners for. We'd love to actually help you get there. I think this could be a lot of fun. Thank you. That's, how we did it at onboard.

[00:00] Hey, folks. My guest today is Paroon Chadha. He is the founder of onboardmeetings.com. He's doing this to inspire and enable the best board meeting experience possible and finding technology solutions to empower that. Alright. Paroon, you ready to [00:12] take us to the top? [00:13] >> Absolutely. Let's have at it. [00:15] All right. Now, a lot of people, maybe they haven't raised VC. They don't even know what it's like to manage a board. Why is managing a board meeting hard? [00:22] >> Great question. Know, I like to say that there is often a board meeting that you have in mind based on your agenda and the pre board meeting discussions. Then there's an actual board meeting that you end up having. And then two days after the board meeting, you realize there's a whole different board meeting that you should have had. And this emotion is true for all CEOs every time I've checked. Board meetings are hard because they're structured [00:50] >> meeting. There's a lot of prep that goes into it. And right before the board meeting, you are clearest about your business. This is what's going well and what's not, and there's new topics to be introduced and they often show up. And the preciousness of that time to make all the calls, to make sure you're thinking through everything makes it a very tough interaction. It's difficult to nail them and our objective is to help CEOs and boards [01:20] >> really get the most out of the investment by making the meeting that you had in mind, the meeting that you actually have, the meeting that you should have had all be the same thing. [01:29] Now, when we chatted back in July or August of last year, you'd said you had over 2,500 founders and boards really using the platform and also a lot of government agencies and things of that nature too. Are you still about 2,500 or have you grown customer base? [01:41] >> We've grown past 3,000 at this point. [01:44] Wow. [01:45] >> And we are adding about, I'd say about 80 to 100 customers a month. That's the clip that we are operating at and we you know since we spoke last time we actually really got a chance to acquire a company called eScribe out of Toronto and [02:04] >> they are squarely focused on the local government, you know, so these are towns and cities, you know, and also special districts and schools. So government funded boards. [02:21] Which that matches nicely the base you were selling into. So when you say you're adding 80 to 100 per month right now, new customers, are they the same kind of customers you've been serving? Their school agencies, boards, government folks? [02:32] >> They're all board meetings, and they're all boards that we are adding, boards and committees. And yeah, we were actually right around sixty, seventy prior with eScribe coming in, are actually seeing most months clock around seventy, eighty to 100, depending on it's a quarterly, a quarter ending month or not. [02:52] Now your ARPU back then, you said that these customers are paying on average $5,000 a year to manage two or three board meetings annually. Was eScribe's ARPU significantly below yours or were they more enterprise than you or were they exact match, same size customers? [03:07] >> They are actually higher. So if you think of a city council, there's often a much bigger number of people involved, some more subscribers. [03:17] >> Their average contract pre transaction was right around $20,000 to $25,000. [03:24] Oh, wow. Okay. Had they learned about Was that because there were more seats using their platform or were they upselling more features that you hadn't built yet? [03:34] >> Seats. And there were some technology that we really liked that has application in all board pursuits that we have. I like this [03:44] >> transaction mainly similar culture, gives access to talent. They're based in Toronto primarily. And then there were a team that was trying to get into The US market. We are of course well entrenched, couple 100 people working in different cities here in US. So we can bring eScribe product to The US market and we've had tremendous success with that. I'm sitting here in Laguna Beach in California and we just signed up Laguna Beach as a customer [04:13] >> two weeks ago. So lots of synergies in market expansion, some access to talent and then certainly rounding out our portfolio in terms of covering all meetings. Public meetings, these are the public sector meetings, should say. And then through OnBoard, we are also of course doing private boards and then publicly listed companies and then also nonprofits. [04:39] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [05:03] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [05:27] get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:49] 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, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're [06:15] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:37] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the [07:03] interview. And when you made the purchase of eScribe, how many customers did they have at the time? [07:08] >> They had about 400 customers and change. [07:11] Oh, 400. I mean, so 400 times the $20,000 ACV. I mean, they were like 5, 6, 8,000,000 in revenue, something like that. [07:17] >> Yeah. I know. I would say, you know, just short of that, but, yeah, that was sort of the revenue range. You know, they were in the 5 to 10,000,000 range for that. I don't know the exact specific number this this time, but, yeah. [07:29] When did you close the transaction? [07:31] >> So since we last spoke, we raised money and then we actually really did this transaction around August, September. So we are closing in on one year anniversary of that. And then we also actually divested, there was a divestiture that happened. There was an Intranet business that I started long ago called OnSemble. So we sold that off towards the end of the year just because it becomes slightly off center compared to, you know, where we were headed. [07:59] What was that called? [08:00] >> It was called OnSemble. [08:02] Onsemble, like O-N-S-E-M-B-L-E? [08:06] >> Spelled O N, but yes, it sounds exactly like ensemble. So it was an employee collaboration product. And to to quickly summarize we started with an employee collaboration tool pivoted towards board collaboration because the intranets are toughest market. The extranets really became very important especially when it comes to boards and all the other folks that you work with. So we pivoted towards that market and then found a lot of success and then now we've added eScribe. With [08:40] >> all of this the focus had become meetings whether it's boards or committees or you know commissions and such and the Intranet product really kind of looked a little off center so we actually got it to the right spot. There's a company called Ncontracts that actually you know, was doing a roll up on various employee collaboration tools and that's where that team and that customer base is now gone. [09:03] Was that a small sort of meaningless transaction or did it make, know, more than a couple million bucks for the business when you when you divested? [09:09] >> No. I I think we sold in November. It was a good time, actually. It was actually it was certainly, you know, you know, it was 8 figures. It was actually a good transaction. [09:18] Oh, wow. Okay. How how much revenue did did the OnSemble product have when you when you divested it? [09:23] >> OnSemble had you know, I I don't know if I'm you know, if I should disclose the revenue, but it was actually, the range was less than 10,000,000. [09:32] Less than 10. Okay. [09:33] >> Yeah. I'm still actually bound by that contract. I can't disclose the exact revenue figure, [09:37] but Well, let me the reason the reason I'm asking is I'm I'm curious how much of like your core you sort of gave up. So I guess maybe a better question to ask that doesn't get you in NDA trouble is what percent of revenue across the entire company did OnSemble represent? Was it 50%? [09:52] >> No, no, no. OnSemble was much less. OnSemble was about, I would say 25% of our revenue. And when we swapped out OnSemble for eScribe, we are actually further ahead. So the revenue run rate basis that was sort of neutral to actually favorable. What we now have is it's like trading a player who'd done really well was not fitting well for a superstar that we can actually all get behind and build a championship team. That's how I [10:26] >> started, you know, marketing to my point. [10:28] That's a great analogy. Now I am curious because when you last came on and talked about the round in August of last year, I believe that was a $100,000,000 secondary at a 400,000,000 valuation, right? [10:38] >> It was not a 100,000,000 secondary. It was actually primary and secondary combined. It was actually a $100,000,000 round. [10:44] Oh, I see. Okay. Got it. So so both [10:47] >> Some of that capital was used for this acquisition. Some of that capital was secondary. Some of that capital actually went on the balance sheet. [10:54] Some was secondary, some for transactions, some for operations. Mhmm. I see. I see. Okay. I mean, can you without getting into trouble here, I mean, less than 50% of the 100,000,000 was secondary? [11:06] >> Less than 50. Yes. And this is a pretty significant transaction. We had looked at this transaction while we were raising money, we kind of knew that we were in due diligence with this team. So this was sort of one of the drivers, if you will. So this gives us a chance to expand into a big market in terms of talent Toronto. Then it also actually allows us to be full spectrum all kinds of board meetings like [11:29] >> I summarized. And then it also gives us a chance to actually expand quickly. Remember, last year we were still in COVID sort of times, which means if had you to add thirty, forty, 50 people, it's extremely hard to recruit people while you're on remote. So this was a good chance to find a team that can actually help us bulk up quickly since we were seeing tremendous growth overall. [11:57] What month did you close the eScribe deal? [11:59] >> eScribe deal was August, so it's coming up actually. [12:03] That was still the hot, hot, hot time. The market hadn't crashed yet. What revenue multiple did you pay for the business? [12:09] >> I don't know if I can accurately share the revenue multiple, but I'll say actually there was some, [12:19] >> I would say, similar multiples. That market was actually really 10 to 15x sort of multiples. It was a good market. And then we got OnSemble sort of packaged and off to Ncontracts also in the same timeframe. And now we are seeing actually really sort of first year anniversary of raising money and doing these transactions all of that come through. We're seeing our growth rates sort of justify all of that while the valuations were you know [12:51] >> crazy in the valley. Remember I was in the Midwest you know still raising money from there And we I was conscious of finding the right partner, not the one who's giving us the highest multiple, but the one who had the best chance of getting us to sort of, know, where I think would be the right spot for this business. [13:10] Yep. Yep. Now, a lot of times when you're doing a deal like this, the team has 58 people. Were they boot was eScribe bootstrapped or was there VCs to negotiate with? [13:17] >> Oh, it was actually really some angels, but it was bootstrapped. Yeah. Largely bootstrapped. [13:22] So very capital efficient. That's great. Was the majority of the deal all cash or do they now have a bunch of stock in OnBoard? [13:28] >> No, I think the employees actually, they all rolled. They were the cohort group and actually really sort of in a deeper L1, L2s were vested and they got a chance to roll here and some of them cashed out because they've been invested for a long time. I really like these transactions especially when I think about being somebody who started a bootstrap business too. You can only hold on to all of that for five, ten, fifteen years [13:56] >> while everybody else around you is actually either working for big tech where they're making big dollars every year or they're seeing these short run startup cycles. This is a great chance to stay in the same business, stay on the same mission while you get to take some chips off. So we saw a little bit of that in this transaction as well. [14:17] But you don't want them to take too many chips off because you want them to be incentivized to stick around and build the now combined business together. So can you share a little bit in terms of what there's a total deal price of X, which you probably can't share, but of X, what percent did you allow to be cash take off the table versus stock in the parent company? [14:34] >> There was not a very simple rule, unfortunately, and I'm trying to form my own framework around this, but a good rule of thumb is, you take half off and then in the new combined entity, you are back on the schedule to get some more options. So you are accurately back in the vesting schedule. Now what people quickly see especially a year into this they clearly see is that the next this is a step function up from [15:04] >> where they were earlier in terms of the rigors of planning, the rigors of recruitment, the rigors of just [15:13] >> investments that go into sales and marketing. And that's been the story. If you ask me last one year, we've gone from twenty, thirty people combined in sales and marketing to maybe sixty, seventy people. That's been above Just in sales and marketing? Just in sales and marketing. Sales and marketing has actually become, [15:32] >> it's US, it's Canada, it's UK, it's Australia, first of all, there are four geos. And then you know chief revenue officer who joined us you know around middle of the year last year, double the number of AEs, double the number of SDRs, lots of you know folks in various aspects of demand gen and partnership management, all of that went through a sea change. That's the big change and every employee whether they have been a long time [16:03] >> member or the ones that came in last year or two, they clearly see that when they see the numbers that really look very different. [16:11] Right? Yeah. So what what is the just for context, what's what's the total team size today? Everybody? [16:16] >> Total team size is actually we are pushing, you know, 275 maybe at this point. And with some reps open, we'll definitely cross 300 before the end of the year. Still high. [16:25] That make that makes sense. And then real quick, just to go back to the eScribe deal. Right? So you mentioned, you know, them doing between 5 and $10,000,000 in revenue when you acquire them and you pay somewhere between sort of a 10 and 15x multiple you closed last November on that. So let's just say that deal price is right in the middle there, like a 70,000,000 all in. What you're saying is you're totally cool having 50% [16:43] of that or 35,000,000 be cash off the table, but you really wanna have the other 35,000,000 of the total deal price be the equivalent stock and OnBoard to build the thing long term together. [16:53] >> I think that's the model that I would like to pursue going forward. These can get actually expensive at times and the investors don't actually like the fifty-fifty model. I was sharing with you there that as an operator who stayed in this for a fair amount of time, if you're not a five year run kind of a business and by the way we are an evergreen business and this is a key difference some pursuits are just going [17:19] >> be evergreen twenty years from now somebody's going to be solving for board meetings I guarantee you. Twenty years from now somebody is going to be solving for employee collaboration. It's such pursuits in the past we didn't really have a chance for people to cash in on some of what they've built. Now with subsequent rounds and some of these transactions I think it's an amazing opportunity that is afforded to early employees and founders. It didn't really shake [17:45] >> out 50%. I was open to up till 50% for some of those discussions. Of course, the founders have a lot bigger shares. Know they're building for long term and that's where these are top heavy plans often. Most of those folks took some chips off but didn't really take as much for the reasons that you cited, they know it's going to compound into a much bigger number here as they look at into the future prospects. Now we [18:14] >> need to know. Employees who are sort of lower in the organization and they've been there for five, seven years and, you know, it's okay for them to accurately kind of just, you know, get that relief and then re up for the next stage. [18:26] And so Paroon, when you look at including the revenue you added from the eScribe acquisition, when you look at your revenue growth rate over the past twelve months, what percentage you hit? [18:35] >> So past twelve would be tough, it's across two financial years. I can tell you our goal for this year is to be actually accelerating in our growth rates. So we'll actually really end close to 50% growth rate for the year if the rest of the plan year checks out. Yep. Is tremendous, you know, that's actually really sort of, you know, one of the key objectives that I had from, this round to accelerate our growth. [19:04] Yep, well, I mean, when you came on last and you talked about last year and again, August, 2,500 customers paying $5,000 ACV, you were at a $24,000,000 run rate then. And if you added eScribe revenue on top of that, you've got to be probably either flirting with or past 30,000,000 at this point, is that accurate? [19:21] >> That is accurate. And ending the year, of course with a few big months end of the year accurately, could get to numbers that are higher than, know, closer towards 35, 37 and you know, we'll go from there. We are also building the foundation for long term success here. This some of the go to market that we've, you know, redone is keeping scale in mind. And our goal is to actually sustain this for three, four, five years [19:52] >> as we actually really sort of continue to leverage all the opportunity that we see here. Some of the things that we find is available to us, some of the talent that's actually becoming available with every step here. [20:09] Yeah, and look, I appreciate how you've built the business. You're one of the rare examples where, I mean, didn't, you weren't super diluted early. I think you did a $5,000,000 private equity round on 30,000,000 valuation back in 2018. But prior to that bootstrapped, right? [20:20] >> Completely bootstrapped, ran a profit for, believe it or not, fifteen years. And some of this math doesn't even make sense, but that's how it worked out. I had two partners early on and both of them actually worked very well for seven, eight years. We were taking dividends and profits. And then we realized that one of the partners wanted to actually move on. And the only way to free up the cap table is to buy him out, [20:45] >> which meant we had to start saving up and I had to take some debt. And eventually, he was bought out. And then the second partner wanted to do the same. [20:53] How much did he own equity? [20:55] How much equity did he own? [20:56] >> That was actually good, more than a third of the company. That was 40 percent. [21:01] Well, bought [21:02] >> back 40% of the business. [21:03] When? What year was that? [21:05] >> This was 2010 to 2014, I think I was paying down that. My other partner was a credit union, that was my early investor and they own about 15% of the cap table. They lend me money to buy the equity from the other partner here. And then eventually they said, could we be on the same plan? Could you convert my equity into debt? And I said, yeah, I can do it if we get to reasonable numbers here [21:34] >> as I'm still running a bootstrap company. And And eventually there came a time when there was no cap table, there was just a single cell, I owned all of it and there was some debt and I the first time we took capital from Five Elms it was to clear out that debt and start thinking about growth again and that was a it's a skip hop jump method but you really do have a wonderful sort of journey now [22:00] >> that you look back at it where early investors made money and then you bootstrapped your way to pay all that off and then eventually took capital to start thinking bigger, scale and higher growth rates. And then you actually go from there. Now it's M and A [22:21] >> building for the next [22:24] >> phase of the business. [22:25] Well, Paroon, people can hear more of your story at Founder500 September first in Austin, Texas. We're gonna dig deeper into all this charts, graphs, more questions. It's gonna be fantastic. Real quick though, what your two final questions here before we wrap up with the famous five. What year did you guys pass a million dollars in revenue? Do you remember? [22:41] >> Million dollars in revenue in 2004, actually, 2005, 2004 or '5, one of the other. Yeah. [22:47] And so when did the company launch? [22:49] >> January 2003. [22:51] Wow. Okay. I love this. Long term, focus, consistent. It's great. [22:56] >> It's my twentieth year of doing this. The success here, the secret here, I should say, that that I've always known that I'll be doing this and I'm still building it like I'm going to be doing this twenty more years. If I can say this not [23:13] >> sounding [23:17] >> like I know how the future is gonna go, investors will come and go if you find yourself in an evergreen space. Keep building like you're gonna own this forever because you just might. [23:27] Yep. I love that analogy. And Paroon, you're managing your capital appropriately. You have taken some dilution, 5,000,000 from Five Elms to take out the debt, $100,000,000 secondary to get the eScribe deal done, plus the divestiture, plus operating capital. But it still sounds like, I mean, you still own what, 40% to 60% of the business personally? [23:43] >> I think I still own substantial portion of the business and I still act really, it's still [23:50] You dodged the question. [23:50] >> Too much to be dodged. [23:52] You dodged the question. All right. [23:53] >> I did dodge the question just because it's actually really, I don't know what I should share. The the path on this is actually far, you know, I'm ahead of what I'd ever thought of. That's what [24:06] I'm I that, Paroon. Let's wrap up your famous five. Quick answers. Number one, favorite book. [24:13] >> Favorite book, I'd say that's a good one actually. What's a good book that I'm actually really hooked to right now? [24:23] >> Actually, you know, favorite book would still be Eating the Big Fish. I think I gave you the same answer last time. [24:29] No. You said Good to Great. [24:32] >> Eating the Big Fish. This is if you're a challenger, number two, number three, go get them. [24:36] That's Number number two, is there a CEO you're following or studying? [24:42] >> I am actually, certainly like quite a few of the ones that everybody follows, Tim Cook, Jamie Dimon. But this time I actually went to Warren Buffett's annual conference and spent a couple of days and really liked the long term value and moat-based worldview that he presents. And I find it extremely compelling. [25:06] Number three, what's your favorite online tool for building OnBoard besides your own? [25:10] >> Favorite online tool? [25:14] >> I'm using [25:17] >> favorite online tool, actually, you know, I'd still say Slack. I Slack just with myself. I should qualify. We use Teams for the company. I Slack in multiple channels. I'm having a great time just using it just on my phone for my thoughts. [25:32] Love that. Number four, how many hours of sleep do get every night? [25:37] >> Five to seven. [25:38] And situation, married, single, kids? [25:41] >> Married with a five year old. [25:44] One kid. And did you celebrate a birthday? Are you are you 47 now? [25:48] >> I did celebrate a birthday. I'm 47 now. My wife and I have been together twenty years and the business has been going twentieth year now. And, yeah, it's a lot to actually continue to be thankful for. [26:02] Guys, there we have it. Launched the business in 2003, broke a million revenue back in 2005, on track to break, call it 35, 36,000,000 this year. They just did a big acquisition, a $100,000,000 secondary plus operating capital, plus money for that acquisition last year at a $400,000,000 valuation. He's being smart with capital allocation in the business. They look so continue doing this for the next twenty years. Again, onboardmeetings.com, help you run effective board meetings, both follow-up [26:26] and pre event to make sure it runs smoothly. Paroon, thanks for taking us to top. [26:31] >> You got it. Thank you so much for listening. [26:35] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday one [26:59] p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two 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 SaaS world, whether it's [27:21] 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 wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna 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 [27:43] saying. Sign up for that at nathanlatka.com slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. 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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