How Paragon Reached $3M Revenue and 100 Customers with Its Embedded Integration Platform (Interview with CEO Brandon Foo)

Intro and Company Overview

Nathan Latka

00:00Guys, use paragon.com launched back in 2019. They help you connect to your customers'applications faster. That means you can onboard them quicker. You can deliver more value faster. They've got a 100 customers today paying on average $30,000 per year. Call it somewhere around a $250,000 a month rate up from $80,000 a month just a year ago. So healthy growth, three x year over year growth. As he looks to be conservative with the series a cash he

00:21raised last year, $13,000,000, he says, quote, still a large percentage of that still in the bank today with a team of 30 looking to scale this year. We'll see what happens next. Hey, folks. My guest today is Brandon Foo. He's the cofounder and CEO of Paragon, previously the founder and c the cofounder and CEO of Polymail, the embedded integration platform for SaaS that has raised $16,000,000 in venture funding. He's a two time Y Combinator alumni with

00:42Forbes 30 Under 30 recipient as well and graduated in math and economics from UCLA where he cofounded Bruin Entrepreneurs, UCLA's largest entrepreneurship organization. Brandon, you ready to take us to the top?

Brandon Foo Background and Polymail Exit

Brandon Foo

00:55>> Absolutely. Thanks for having me, Nathan.

Nathan Latka

00:58You bet. So it's great having you on. Again, this was a weird talking about this. This was back in 2017, I think, when you came on to talk about Polymail. What happened to that business?

Brandon Foo

01:06>> Yeah. So long story short is we built a great product to Polymail. We grew it into a profitable company, but one that wasn't necessarily growing at a venture scale rate. So what we did is, you know, we decided to run it as a profitable business. It's still around today, and eventually had small exits and, I stepped down and eventually transitioned to start at Paragon a little over three years ago.

Nathan Latka

01:29That's awesome. Walk me I mean, so so how did you run the exit of the sale process? I mean, was it a was it a friend who just took it off your hands at cost? Or how did you run it?

Brandon Foo

01:39>> Yeah. So I actually stepped down from the company a little bit before that, but ultimately, we sold it to one of our investors. Oh. So, again, it was a very small exit. Yeah. But Yeah.

Nathan Latka

01:51But you you you didn't make a bunch of money off of it. Right? I mean, this was basically like, has a new home. You can move on to your next thing.

Brandon Foo

01:57>> Right.

Nathan Latka

01:58Interesting. And was this one of the investors? I think you guys raised, 7 or 800 k, right, in pre seed or seed money. Was it one of those investors?

Brandon Foo

02:04>> Yeah. That's right.

Nathan Latka

02:06Can you share who?

Brandon Foo

02:07>> It was Ryan Mikkel.

Nathan Latka

02:08Interesting. And did he bolt I'm not sure if that's a female or male. Did he did they bolt that onto another company or just they're still running it standalone?

Brandon Foo

02:17>> They're still running it.

Nathan Latka

02:18Very cool.

Brandon Foo

02:19>> I believe it's yeah. Still a profitable company today.

Nathan Latka

02:22Okay. So there were just to be clear, the reason you stepped away is because it was clear to you this was never gonna be venture scalable and you really wanna go build a venture scalable company.

Brandon Foo

02:31>> Yeah. Again, know, I think we built a product that people loved. We had tens of thousands of active users, but the email space is tough. And I think, you know, it wasn't necessarily something that had, the potential to grow into a venture scale business. So, you know, eventually I stepped down for that reason and, started Paragon.

Nathan Latka

02:51And you have to remind me, what was your best month at PolyMail in terms of MRR? Do you remember?

Brandon Foo

02:56>> I don't remember off the top of my head. No.

What Paragon Does and Customer Example

Nathan Latka

02:58Alright. Let's jump into Paragon. What's it do? Describe a customer and how they're using you today.

Brandon Foo

03:03>> Yeah. So Paragon is a embedded integration platform for SaaS apps. So what we do is help software companies integrate their products with third party SaaS applications like Salesforce, like HubSpot, and allow them to get to market faster with new integrations to provide to their customers. So an example of a customer is, SalesHood. Some of our audience may be familiar. It's a sales enablement platform and by nature of their products, they need to integrate with the data

03:29>> in their customer's CRMs like Salesforce and HubSpot, for example. So with Paragon, they're able to easily embed these CRM integrations into their products and provide them as customer facing integrations that allow them to connect to their customers'CRM data in Salesforce or HubSpot, for example.

Nathan Latka

03:47So is this very similar to like what Kodat does for like embedded finance? They allow finance companies connect to, you know, QuickBooks or their customers. To to your degree, you've got folks that if if if a company uses you and they need their customers CRM Salesforce access, you will help them build that basically, unlock that API without having to build a custom connection to Salesforce's API.

Brandon Foo

04:10>> Yeah. So the use case that we serve is similar in that we enable our customers to easily connect to their customers'data in third party apps like Salesforce, CRMs, accounting systems. Our approach, our product approach is slightly different from Kodat and other vendors in that we provide a fully visual workflow editor along with an SDK that allows our customers to both easily embed the product facing integrations and we provide embedded UX components example as well. Customers

How Paragon Compares to Competitors

Brandon Foo

04:37>> can display for their end users to connect their integrations. We also provide a workflow builder that allows our customers to easily map the data, basically the integration logic that they can then provide for their end users.

Nathan Latka

04:52Oh, 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

05:15your 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

05:39get 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

06:01not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder 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

06:27going 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. All right. We're gonna go back to the YouTube video here in a second. But

06:49if 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

Pricing Model and Average Contract Value

Nathan Latka

07:15the interview. Got it. Very interesting. And I guess help me understand pricing on this. Is it per API call, per integration? What's the average customer pay per month?

Brandon Foo

07:24>> Yeah. So we price based on usage. So number of integrations, as well as request volume or task volume. And so our pricing varies depending on a customer's usage of Paragon. But on average today, our customers are coming in around 30 to 40 ks ACV. That has grown over time. And now we're starting to work more towards mid market and even enterprise. So we're starting to work towards 6 figure plus ACV range.

Nathan Latka

07:49Someone paying you $30,000 per year, how many integrations do they likely have and what's their task volume probably look like?

Brandon Foo

07:56>> Yeah. So typically our 30,000 a year package would include around five integrations up to, let's say, a million tasks or requests per month. And then there's certain features too that we might include on certain tiers that could help determine pricing as well.

Package Details and Usage Mechanics

Nathan Latka

08:11So let's say a let's say I'm paying you 30 k per year and my I need access to my customer Salesforce and I need it updated every day. So I'm gonna have to hit I'm gonna have to use one task basically for that one customer. Let's call it 365 times in a year. Do do does that count as 365 times? And so if I wanted to have real time frequency, it's basically like, that's not possible because

08:36I'd it'd be too expensive.

Brandon Foo

08:39>> So our starting package usually includes up to a million tasks per month and customers can well exceed that volume as well. And we just price based on volume beyond that initial, task quota essentially. But the usage can depend based on the users or the customer's use case. So you could be syncing, you know, one request per day, you could be syncing hundreds or even thousands of requests per day too. So it does highly depend on, yeah,

09:04>> the shape of the customer's usage, the type of use cases that they're trying to enable for their customers.

Nathan Latka

09:10I see. Okay. Put all this on a timeline for me. When did you launch the business?

Company Timeline and Funding History

Brandon Foo

09:13>> Yeah. So we started Paragon in the end of twenty nineteen. We're about three and a half years old now, I think. We raised, we went through Y Combinator in winter twenty twenty. I raised a small seed round, about 2 to $3,000,000 back then. And, just raised our series A, dollars 13,000,000 series A in, the spring of last year. So today we're about 30 employees and growing and very excited about where we're at today.

Nathan Latka

09:40That's awesome. So I guess take me back to the seat in 2020. Said you raised 2.5 there?

Brandon Foo

09:45>> Yeah. A little over 2,000,000.

Nathan Latka

09:47And most folks in their, you know, seed, pre seed rounds, you know, back in those days were selling 15 to 20% of the company. Were you sort of in that same range?

Brandon Foo

09:55>> Around that range. We did go through Y Combinator, so that factors into that a little bit.

Nathan Latka

10:03But most people, though, when they go through YC, they'll give YC the premium. Right? They'll the the whatever it is, 150 k for 7%, but they won't let other investors come in at that same, quote, lower valuation. Did you have did you take the full 2.5 at the YC valuation?

Brandon Foo

10:17>> Yeah. I can't disclose exactly, but it was around the typical range that you would see for a seed round.

Nathan Latka

10:24It was around the typical range that you would see for a seed round. Well, I guess, let me put it this way. A 150,000 for 7% of your company is extremely dilutive. In fact, I think that actually the the total valuation would be under 2,000,000 if you let everyone come in at that on those terms. So how did you manage that?

Seed Round Details and YC Dilution

Brandon Foo

10:44>> Yeah. So our seed investors, excluding YC, were at a different valuation, of course.

Nathan Latka

10:48Okay. Got it. That's what I was asking.

Brandon Foo

10:50>> Consider our seed round, all funding raised, including YC, YC averaging that ownership percentage roughly around the range of what you would see for a typical seed round.

Nathan Latka

10:59I see. I see. Okay. Got it. You sell 15 to 20% of the company, which means that, you know, it's around a valuation of 10, $15,000,000, something like that.

Brandon Foo

11:07>> Around that range.

Nathan Latka

11:09Fast forward, why series a in spring of last year? What makes this company expensive to grow?

Brandon Foo

11:15>> Yeah. So first of all, I think we hit an inflection point last year where we had grown at a nice rate. We validated that, you know, this is really a problem that customers have in the market and that we have a product that customers love using. And, because of that, you know, we felt it was a good time for us to pursue a series A. You know, in terms of growth for us, there's really two areas

11:36>> of investments, engineering and go to market. So as far as engineering, you know, we are building integrations on behalf of our customers and that requires really a dedicated integrations team, which we essentially utilize to build and maintain the integrations that our customers are then using through their products through Paragon as well. So we're able to use the funding from our series A in order to, you know, invest into the products, growing our integration catalog, growing the

12:06>> products and our features in general. On the go to market side, you know, we are always, well, I would say before our series A, we were in a position where it was really just me and I think one account executive who was leading sales. So with that, we were able to validate, you know, we're able to get customers, you know, customers are buying the product, we're able to validate that, you know, we have a go to

12:27>> market motion, at least the early workings of one that works. Then, you know, today after raising our series A, I think we're really in a phase where we're looking to scale from one to 100 and really build a team and the organization, the playbook that can scale our go to market strategy from today into the next few years, really transition from that founder led model.

Nathan Latka

12:46And then again, in Series A, most companies are selling 10 to 15% to your company. Were you sort of in that same range?

Brandon Foo

12:52>> Around that range.

Nathan Latka

12:53Okay. Take me back to the first customer. How'd you get them?

Brandon Foo

12:57>> Yeah. So the great thing about the YC network is that you have a lot of folks who are, eager to try your product. And, I think the YC network is over a thousand companies today. We started off by really selling to other companies in our batch, other YC founders that we knew. And because the problem that we're solving is one that inherently every SaaS company has. We got a lot of our early customers from our YC

First Customers and YC Network

Brandon Foo

13:21>> network, friends, the companies in the batch, and we're really able to grow, start growing from there.

Nathan Latka

13:27One of the negatives that you'll hear from buyers when they're looking at acquiring a company that was run through YC is when they go in and do the DD after the term sheet signing and they see the customer list, and it's a bunch of other YC companies, they go, man, are these companies really getting value here, or are they just buying it because it's VC dollars being traded back and forth? And sometimes I've seen it hurt

13:48valuation. Would you agree or disagree with that?

Brandon Foo

13:52>> I could see why people would think that. But I would say that while we started with our initial customer base in the YC community, We have, in the last couple of years, grown pretty far beyond that. And I think we've definitely extended the reach of our go to market and our customer base, well beyond just the YC community.

Nathan Latka

14:09That's great. So how many customers are you serving today?

Customer Count and Revenue Growth

Brandon Foo

14:13>> Yeah. So we work with just over a 100 customers today around the world, and I've been growing nicely over the last couple of years.

Nathan Latka

14:20Yeah. I know. That's great. A 100 customers at that ACV you said earlier means you're doing, what is that, like, $250,000 a month in revenue, something like that?

Brandon Foo

14:27>> I can't disclose the revenue exactly, but, around that range.

Nathan Latka

14:31That's awesome. And if you're around $200,000 a month today in revenue, where were you a year ago so we can look at growth rate?

Brandon Foo

14:37>> So we grew by a little bit, close to three x in the last year. So we started last yeah. Last year around, I'd say, the 1,000,000 ARR range.

Nathan Latka

14:47Yep. Yep. That yep. That's great. And then okay. So it took you basically from 2019 to 2022 to break that million dollar run rate range. Any learnings from there? Was there a way that they could have done that faster looking back, or was it gonna always take three years no matter what?

Brandon Foo

15:00>> We definitely went through several product iterations since we first started at Paragon. So the products, as we know it today, Paragon, really we launched in the market at the beginning of twenty twenty one. So we've been in the market now for about two years, just over two years. But definitely a lot of learnings from that, you know, first year of really building, iterating, talking to customers, seeing what works That's I think ultimately led us to, you

15:25>> know, what's, we've built today and what we've learned about our market, our customers, and what they're trying to achieve with Paragon.

Nathan Latka

15:30And Brandon, when you did your seed round, did you guys set up an ESOP pool?

Brandon Foo

15:35>> Did we set up what? Sorry.

Nathan Latka

15:36An employee stock option pool?

Brandon Foo

15:39>> Not at our seed rounds, but at our series a.

Nathan Latka

15:43Okay. So question for you. Right? If you were doing a million last year, call it a run rate, and you raised you know, you sold about 10% when you raised 13,000,000, that would put you at valuation of, call it, somewhere north of $100,000,000 or about a 120 x multiple. No one is getting that now today. The market has really changed. And you're seeing a lot of these folks that raised these premium evaluations twelve months ago now

Product Iterations and Go-to-Market Evolution

Nathan Latka

16:02have been deal with morale issues because every single option every employee owns is way underwater. How do you think about that?

Brandon Foo

16:10>> Well, I can't disclose our exact valuation series a, but I will say that it's not exactly the range that you stated.

Nathan Latka

16:20Oh, okay. Sorry. I mean, even if it was more conservative. Right? I guess even fast growing SaaS companies today, the best ones are getting only, like, eight, nine, 10 x. You are way above let's just put it this way. You are way above that. Right? Maybe you're at, like, a 40 or 50 x instead of a 100 x, but this question is still the same.

Brandon Foo

16:36>> Yeah. So look. I think that, you know, the folks that we have on our team and, you know, we have an amazing team of incredibly talented folks, I think, are here really because they believe in the long term vision of Paragon and what we're doing and really the opportunity that lies ahead of us in the market. I think that if we are successful in executing our vision, Paragon will become the default solution for customers building integrations.

16:59>> And so I think, you know, our, we and our team by extension are really focused on that long term vision more so than the day to day or year to year fluctuations of the market. And I would say that ultimately, you know, our team has not, really expressed concern. And I think that we are not concerned about, you know, seeing some of what's, the market may be showing us, you know, in these few years, we know

Series A Cash Management and Efficiency Focus

Brandon Foo

17:23>> the market changes, you know, year to year, but ultimately we're focused on, I think really the potential and the opportunity of what we can achieve at Paragon in the long term. And, that's what we're most excited about.

Nathan Latka

17:34How conservative are you being with cash? Do you still have most of the 13,000,000 in the bank?

Brandon Foo

17:38>> Yeah. So, we do have a large percentage of our Series A funding. I would say that, especially in the last few quarters, we've been increasingly focused on efficiency and we have managed to improve along all of our efficiency metrics, including cost of acquisition, burn multiple gross margins. And I think we still have a way to improve. We still have room to improve certainly, but that has become a core focus for us as a business, not only

18:03>> in growth at all costs, but growth with increasing efficiency.

Nathan Latka

18:07Brandon, some would argue we're going into a recession. You know, with that in mind, I mean, you comfortable new net burn 200, $300,000 a month? Or what are you optimizing net burn for right now?

Recession Positioning and Market Opportunity

Brandon Foo

18:17>> Yeah. So I can't share those numbers exactly. But like I said, we are focused on continuing to improve our efficiency across the board in go to market, in operations, product and engineering. And so that is certainly a top priority for us. We are fortunate having just raised our series A last year that we are well capitalized and I think very well positioned to enter the next few years of the economy where, you know, no one knows

18:41>> what's going to happen. Right. But I think that we're also uniquely positioned to help a lot of companies in this type of market where a lot of companies are looking to do more with less, where they may need to still get to market with new integrations, but they may not be able to bring on new engineers in order to do so. And I think that's a position where Paragon is really able to help these companies accelerate

Famous Five Rapid Fire Questions

Brandon Foo

19:04>> their products, their integration strategy, and do so in a way that's far more efficient, which everyone is, you know, I think, looking to do today.

Nathan Latka

19:12Brandon, on that note, let's wrap up here with the famous five. Number one, what's your favorite business book?

Brandon Foo

19:18>> Steve Jobs Biography by Walter Isaacson.

Nathan Latka

19:20Number two, is there a CEO you're following or studying?

Brandon Foo

19:25>> I've always been inspired by Stuart Butterfield at Slack, although he did just recently step down.

Nathan Latka

19:30Number three, what's your favorite online tool for building Paragon?

Brandon Foo

19:35>> I'll give you two, both YC companies, VimCal for calendar and Sunsama for task management.

Nathan Latka

19:39Management. You Use use them them both both every day.

19:42Number four, how many hours of sleep do you get every night?

Brandon Foo

19:46>> I try to get eight.

19:48>> Usually, six or seven. But I think sleep is incredibly important, and I try to get eight if I can.

Nathan Latka

19:53And Brandon, what's your situation? Married? Single? Kids?

Brandon Foo

19:57>> I am married for the last two and a half years and no kids yet.

Nathan Latka

20:03No kids. And how old are you?

Brandon Foo

20:04>> Potentially on the road map.

20:06>> I'm 31 as of this month.

Nathan Latka

20:08Congrats. Happy birthday. Last question. Something you wish you knew when you were 20.

Brandon Foo

20:14>> If I could go back when I was 20, I would probably drop out of school and join a startup so I could better learn how to start my own in the future.

Nathan Latka

20:21Guys, use paragon.com launched back in 2019. They help you connect to your customers'applications faster. That means you can onboard them quicker. You can deliver more value faster. They've got a 100 customers today. Paying on average 30,000 per year. Call it somewhere around a $250,000 a month rate up from $80,000 a month just a year ago. So healthy growth, three x year over year growth. As he looks to be conservative with the series a cash he

20:43raised last year, $13,000,000, he says, quote, still a large percentage of that still in the bank today with a team of 30 looking to scale this year. We'll see what happens next. Brandon, thanks for taking us to the top.

Brandon Foo

20:53>> Thanks for having me, Nathan.

Nathan Latka

20:55One 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

21:19p. 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

21:41an 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 SaaS 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 You can go in there and quickly search and see

22:02what people are 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. Feel free to let me know what you thought about this episode. 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, I do it so that we can all learn. We have to

22:22counter those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.