PriceOps Revenue, Valuation & Funding (2023)

[00:00] Priceops.net. They started building a platform, call it a couple months ago. They have three co founders, husband and wife team owned 70% together. The engineer owns 30%, also a lifelong friend. Company is hoping to solve the pricing issue, trying to identify why a solution like this doesn't exist today. They're launching their own pricing plan here targeting end of June at maybe a thousand bucks per month, ultimately trying to price their plan against an outcome based metric, [00:24] which they're still trying to figure out what that will be. 10 on the waitlist so far, which he's done via cold outreach on LinkedIn. Hey folks, my guest today is Nikhil Kotcharlakota. He's a data entrepreneur, pricing enthusiast, and has been in the pricing discipline for the past ten years. He loves the impact price can have on business growth and is now building priceops.net which is an end to end pricing solution for SaaS companies. Nikhil, are you [00:47] ready to [00:47] >> take us to the top? Absolutely. [00:49] All right. So just give us a description of a customer that use you today and how they use you. [00:54] >> Yeah. So we are still pre revenue but the customers that we are targeting would be anyone who is working on pricing in SaaS companies. Right? So that could be a pricing manager, product managers, product marketing managers like that's the profile or that's the type people who would be using that for. [01:11] Okay. And how much have you spent of your own money so far building MVP? [01:16] >> Oh, I mean, it's not too much that we spent. I mean, I got lucky because I found an amazing co founder. I mean he's been a friend of mine for more than seventeen years. So I got him on board. We have not really spent anything outside. It's more of me again just our day to day expenses right. So nothing major expense but yeah. [01:35] Okay so you have a co founder and do you split equity fiftyfifty? [01:39] >> Not fiftyfifty exactly. We actually have three co founders so one is my wife as well she's doing the product and customer success side of it and customer interviews. So it's 35, thirty five and thirty. [01:53] Okay. You and your wife have owned 70% together? [01:56] >> That's right. [01:56] I see. I see. Okay. So you're hustling, you're being scrappy. Guess help me understand how you discovered this problem, right? Were you working in another company and hated the pricing experience you were running or how'd you discover this? [02:09] >> Yeah, so I wasn't like I said, I was in pricing for a long time in my life. I was actually in the manufacturing side of it for the majority my experience or in my career but what I realized was price the impact pricing tools can have on just the whole pricing process and how it can improve it and how it can make our lives that much easy so we can make decisions faster. So during that time [02:29] >> I spoke to a lot of SaaS companies and I was based in Charlotte, North Carolina but I was talking to a lot of companies in California and a lot of what I realized was they were all like trying to understand how to do the price right like how to get the right pricing or what's the process. So majority of the companies I spoke with especially early to mid state startups they were like looking up pricing processes [02:52] >> online like just trying to Google it and trying to figure out their pricing or maybe even use the competitor pricing as a benchmark. So what I realized was it was a big pain point on for companies to figure out their pricing and the price models to use. So that kind of gave me an idea on okay I see that companies are struggling with that and product in that space would really help companies make that decision faster. [03:17] Okay so how are you going about discovering if you have a real product here? Mean when you plan to launch the pricing page or how big is your waitlist today? [03:25] >> So we have a little bit of waitlist it's not too large but what we are doing is [03:29] How many people are on the waitlist? [03:31] >> About 10. [03:32] Okay. [03:33] >> And most of them most of them were through the customer interviews that we got. [03:37] Are you getting them to respond to your emails or your LinkedIn requests? How are you getting their attention? [03:41] >> I mean, just just reaching out to individuals, just cold outreach, really trying to [03:46] Email or Twitter or LinkedIn? [03:49] >> LinkedIn and email. [03:50] And so what's the LinkedIn if you're messaging somebody cold on LinkedIn for this product? What do you say? What's the text? [03:57] >> Mean mainly to get their pain points and the challenges that they're trying to work through to [04:02] Nikhil, if someone emails me on LinkedIn and says, please reply. I wanna know your pain points and challenges for my new pricing software. I'm gonna say I don't have time for you and I'm gonna ignore you. What specifically are you putting in the first LinkedIn message to get a response? [04:13] >> I mean, that that's pretty much it though. Like, I mean, I've I've been getting decent responses, but what I'm trying to say is, like, like, how challenging pricing can be and what we we are we are trying to build the product and feedback from industry experts like them would would really help and folks have been really good at responding back to that. [04:31] 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 [04:55] 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 [05:19] 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 [05:41] not 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 [06:07] 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. All right. We're gonna go back to the YouTube video here in a second. But [06:29] if 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 [06:55] the interview. Open up your LinkedIn on your computer and read to me a cold message you sent somebody. [07:01] >> Okay. [07:02] Is it like one sentence or like 30? [07:06] >> About 15, I'd say. [07:08] 15 sentences? Yeah. Oh, so it's long. I mean, is a you're using InMail? [07:13] >> It's paragraph. Yeah, I'm using InMail. [07:15] Yep. Okay, read one to me. [07:18] >> So the one I got response to right. So this person was head of pricing at a company. They were and they put it on their LinkedIn page that they're working on pricing and packaging. So I said I see that you're working on pricing and packaging changes and we are building at priceops are building an end to end pricing solution. I would like to get your feedback on what challenges you're facing and how we can build the [07:39] >> best product to solve those problems and if you have about thirty minutes to spare, would like to get some insights from industry experts like you. [07:46] What'd they say back? [07:48] >> They said happy to chat and they gave a certain time timeframe that they're free on and I set up an interview. [07:56] Interesting. And what are some of the key questions you're asking when you get that call set up once you have them live? [08:01] >> So mainly like what does their pricing process look like from [08:07] >> starting to the ending and to get it live? And what are the pain points? What are the tools they use today mostly Excel? And how do they actually validate their pricing? And how can how can certain the tools that we're building can help them with all these steps? And like what price models they use? How do they find the optimum pricing and so on? [08:25] Okay, talk money to me. When do you start charging people? [08:29] >> Probably by the end of June is what we are trying to get to. [08:33] And what do you think you're going to start with in terms of a pricing point? [08:37] >> We are starting to target like maybe early stage companies to begin with. So probably around a thousand to $5,000 per year is what we're look trying at. But once we can prove out the concept and actually add more features in the tool, contract, the ACV can be much larger. [08:57] And what are you pricing against? Number of seats, number of SKUs, number of GMV? [09:03] >> It's going to be a flat rate to start with but I have like again I'm actually passionate about outcome based pricing models. So we are actually figuring out how we can charge based on the outcome that we are delivering as well. So that's something that I still, we're still figuring out. [09:19] Okay, interesting. All right, very cool. So, okay, you're building and then who's, who's the engineer? Who's doing all the tech work? [09:25] >> So it's one, it's my co founder, Sharath. He's been the front end developer for a past twelve, front end and back end developer for past twelve years and he's the one doing all the work. [09:37] Do you convince him to work for free in exchange for 30% equity? [09:41] >> Again I've known him for more than seventeen years. I mean he's one of my closest friends and what I did of course was like pitch the idea to him and the size of the market as well right like I think it's a big problem to solve at least that I still strongly believe that so that kind of convinced him to get on board. [10:00] Who is doing the best job solving this right now that if you do well you're gonna kill them or replace them? [10:06] >> Probably so this is pretty new in most of the for most of the companies. Some of the ones probably already there are like maybe ProfitWell. I think Paddle recently acquired them sometime last year. They are doing some parts of this but someone who recently started like Ibaka is one of the tools that [10:27] are selling this. [10:29] >> I b b a k a. Okay. So they're pretty new and they're again trying to solve that problem. And I think Minoa is one other company that's trying to solve this problem. [10:40] Can you spell that one? Noah? [10:42] >> Minowa, it's M I N O A. [10:44] M I N O A. Interesting. Why aren't there more and larger competitors? I mean, Paddle, I mean, ProfitWell was only doing 5,000,000 in annual revenue. I mean, I say only, but they have a massive team. They're only doing 5,000,000 in annual revenue on their churn product, their retention product. Paddle obviously acquired them. Abeka looks new, Manoa looks new. I mean, don't you want to go compete in a space where you know that the prize is, you [11:06] know, a ten, fifty, a hundred million ARR SaaS company? [11:11] >> Yeah, you're right. Mean, but I think this problem is definitely something that needs to be solved, right? Like I think today it's very much consultive and consultant based model. But I think a tool, it won't replace the consultant, but it's going to give the self serve option for companies that are ready to do it. I think like I'm not sure why there have not been companies that are that solve this problem. [11:35] Don't you need to know that answer? I mean isn't that the best of your time is to understand why this doesn't exist already because you might discover something you don't want to hear which is there is no market for it. [11:44] >> So that was one of the things that I started off with right like talking to most of the companies. I mean I was at SAST at APAC earlier this year too and talked to a lot of companies there as well. They all think that this tool will help them right? Like they all said that this tool will help them and I've been reaching out to them once we once Well what paying [12:02] for are right now if they say a tool like this will help them and then they say and you know right now we're paying x to solve it? [12:09] >> So today so it's almost like them like either the co founders or like if it's an early stage startups is the founders, co founders trying to solve the problem themselves like using Excel right. So there is no tool that they're paying for today. I mean if you say Excel or Google Sheets that that's what they're paying for but what they're not sure is is there a pricing right. Right like is the right is do they have [12:30] >> the right pricing? Do they have the right pricing model and to get that they either have to hire a consultant outside or have the pricing expertise which could cost anywhere between 50 to 100 ks like depending on the consultant that you buy. [12:42] Yeah, just always get nervous when I hear a founder going to attack a space where there is no player, mean, Becca has 17 employees, Noah has three employees. Paddle, know, capped out and there's a reason they sold like ProfitWell, sorry, capped out at 5,000,000 revenue there. I mean, maybe this isn't the problem that people are willing to pay for. Maybe Excel is the solution. [13:01] >> I mean, again, I believe like we can solve this problem, right? Again that's that's something that all the customers we talked to all most of the founders we talked to they said they want it and they're willing [13:12] >> to But not for it right now. [13:13] There is I'm sure other people tried this right. [13:16] >> No one else there is no other company that you just gave me the list of that's doing 50 or $100,000,000 of revenue helping people figure out pricing for their SaaS products. [13:27] >> Yeah, not yet. Not yet. Yeah. [13:30] But what that's what I'm saying is don't you have to understand why it doesn't exist? In other words, Elon Musk knows the reason nobody else is living on Mars is because the oxygen content level is too low and the amounts, you know, to take one pound from Earth to Mars costs x amount of money. He knows the problems to solve. I haven't heard you list the real reasons that a company like this doesn't exist today and [13:50] how you're uniquely qualified to break through those items. [13:54] >> Mhmm. Yeah. Yeah. Yeah. But good point. Again, like I said, I don't I still don't understand why there is no one trying to solve this again there are new players in there. If I have to identify or if I what I think the answer to that would be is [14:10] >> there probably no one's probably figured out a way to productize this the solution right like it's it's like I said it's a consultant based model like each each company could be a different like there are different inputs for each company the the price model could be very different for each one. So maybe no one's been able to productize that yet. And that's probably why no one exists. [14:32] Well, we'll see what happens. Have you bootstrapped the company, Jin or have you raised capital? [14:36] >> No. It's bootstrapped yet as of now. We are looking to raise capital very, very early sales Again, once we get the product and some some proof of traction that's on here, we'll go pretty [14:46] How much are you looking to raise? [14:47] >> Probably around 500,000 to 1,000,000 to start with. [14:53] And what cap? I assume you're gonna need to note. What what cap do you think you'll try and get? [14:58] >> So again, like, maybe about 5 to 10,000,000, 5 to 10,000,000. Mhmm. Mhmm. [15:03] >> So $55,000,000 would be pretty standard. [15:04] This market though, you never know. We'll we'll see what happens. [15:07] >> On that note though, Nikhil, let's wrap up here with the Famous Five. [15:10] Number one, what's your favorite business book? [15:12] >> I mean, there's a couple, but right now it's The Hard Thing About Hard Things. [15:16] Number two, is there a CEO you're following or studying? [15:20] >> Again, that's I'm trying to learn from a lot of them, but I think Yami Rangan from HubSpot. [15:25] >> Yep. [15:26] Number four, how many are number three. What's your favorite online tool for building priceops? [15:30] >> Right now it's the Atlassian sort of products like Confluence and Jira. [15:35] Number four, how many hours of sleep are you getting every night? [15:38] >> That's a little less right now, guess, but maybe around five to six hours. [15:42] Okay, and situation married, single kids, know you're married, but any kids? [15:45] >> Yep, married. Yes, one kid already is about three years old and the second one's on the way [15:50] actually Congrats. In a couple of That's exciting. How old are you? Thank [15:53] >> you. I'm 36. [15:55] >> 36. Last question. [15:56] Something you wish you knew when you were 20. [15:59] >> Oh, wow. So I think what I would say to my 20 year old self is like to get started on a problem that I think is a problem and get into this entrepreneurial journey earlier. So again, learning the waters early in my career. [16:13] Guys, have a priceops.net. They started building a platform call it a couple months ago. They have three co founders, husband and wife team owned 70% together. The engineer owns 30%, also a lifelong friend. Company is hoping to solve the pricing issue, trying to identify why a solution like this doesn't exist today. They're launching their own pricing plan here targeting end of June at maybe a thousand bucks per month, ultimately trying to price their plan against an [16:36] outcome based metric, which they're still trying to figure out what that will be. 10 on the waitlist so far, which is done via cold outreach on LinkedIn. Nikhil, thank you for taking us to the top. [16:45] >> Alright, thank you, Nathan. [16:48] 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 1PM [17:13] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, 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 an acquisition, a big [17:36] 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 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 [17:57] for that at nathanlakota.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, but I do it so that we can all learn. We have to counter those people. We got [18:17] 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. [18:24] >> See you.