Proleads Revenue & Valuation (2020)

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is anders fredrickson he's got 15 years of startup experience as founder ceo or cto he's most recently founded and is the ceo of pro leads which is acquired by outbound works in a seven figures cash deal plus stock just recently and that's we're going to talk about today anders is ready to take us to the top sure all right so you have a history of acquisitions you were cto at our at arrival guys which which sold the lonely planet founder and ceo of table finder which was required by visit you've done the acquisition thing a couple times so when did the acquisition of pro leads happen without bound works um so that was in 2018 2018 and um give us a sense of uh like on a timeline perspective when did you launch the company so how many years up to the sale yeah so the first initial launch of what eventually became pro leads that was in 2010 so eight years of struggling yeah downs and yeah all that all that well and i enjoyed it i mean you came back on check this out you're one of my early ones january 3rd 2017 you were on the show at that time you had communicated about five or about 100 customers paying 150 per month on average for about 180 000 a year in revenue that was 2017. so beginning 2017. so so let's first start off with products so for people that missed that interview help us understand what the product the pro leads product did this i'm a bit rusty now on my on my product pitch but essentially it was automated sales development so the the product allowed you to um personalize emails at scale for for the purpose of b2b sales if you're going out you know every every b2b company they want to do some sales then they're going to hire some sales development reps um essentially and those reps need tools to be able to do their jobs and we were one of those tools yep so let's finish that story up to right before the acquisition so starting off it will finish in 2017 about 200 thousand dollars in arr where did you finish 2017 at i don't remember to be honest like the exact it was it wasn't uh a ranges so it wasn't it wasn't the incredible growth in terms of revenue because we had um a major problem which was part of the decision to sell actually so um the way i like to describe it is that we developed this sort of imagine that we built this uh perfect race car um that was like you know race tuned ferrari that was perfect for driving on the track but the problem is that we were selling it to people that just got their driver's license and couldn't really didn't really know how to drive that product so that was like one of the main reasons why we wanted to um see what we can do and and maybe i'm not sure do you want to go into that right now with dude well i wanna i wanna understand what you mean that when you say not good growth i mean it might not be good to you but if that's all relative to to you and obviously have a massive audience so when you say not good growth i mean did you finish 2017 maybe flat year over year or i i think it was it was flat or maybe just a little bit up and it was like the biggest problem that we had was churn yeah how big was it so what was like gross revenue churn annually um it was bad it was like over i think over over the whole year maybe like 50 percent of the customers we sold two churns so like like terrible yeah so yeah so it was a there was a lot of problems with the product itself um it wasn't it was the problem with what with what it saw because it solved a real problem and it solved that problem really well the problem was sort of in between there where how do you get your customers and your users to use the product in the way that it solves their problem and we were not really great at doing that we so right right before the acquisition we actually sort of revamped the whole company uh rebranded it as hexa we brought on a new co-founder and we also actually made a a small acquisition in that in that process i'm happy to dive into that more yeah so let's so let's dive into that so this would have this was mid-2018 no no so this was uh this was actually when was our interview again in in january 2017. yeah so this was in 2017. so sort of in the in the summer that year we um did a little bit of restructuring we got a new co-founder on board as well as named brendan short those were really good good choice for us um and we made an acquisition of a company called brisk or an asset purchase i should say so that was a what asset were you purchasing so we purchased the um all the assets from a company called brisk what was the revenue that they were doing at the time uh they had essentially shut down the company and we bought the technology uh okay so i don't have those numbers what did you buy the technology for uh it was in a six-figure deal okay so call 100 grand of maybe 300 grand somewhere in that range yeah and why did you pay that much for technology um because it was something that we wanted to build ourselves but this could this really short shortcut our path to um to having to instead of having to build that platform ourselves we got the technology so it was a yeah the technology that required it was a very advanced browser extension it also came with a bunch of customers so we could um continue to sell to um how many i think it was around 20 or so okay and are you talking about is b-r-i-s-k yes okay got it and what did the extension do um so it was a actually explained this uh so it was a connected connected to salesforce and helped the sales reps directly interact better with their sales force as well as do a bunch of automation on on other websites that they were on um which is why we wanted to have it so previously we had been this you know one platform that just did one thing like we just we're just talking about the um you know personalization of emails and so on but now we sorry are you still there yeah yeah it froze up a little bit um so yeah so we we were talking a lot about how um one second you just need to move this yeah under sorry sorry just so we because we have a short amount of time here so 2017 200 can arr summer you bring in the new co-founder you spent 100 grand at 300 grand to acquire a chrome extension that connected to salesforce how much did that impact your cash balance in in the bank at the time i mean was that a significant portion of what you had left um so we actually did an additional fundraise at that point so we might join so we joined the alchemist accelerator and we got in an extra i think it was 150 200 something like that i can't remember exactly the exact numbers um so but we got into the oculus accelerator which is a prominent b2b accelerator and that's what we uh focused a lot of the development and we had a lot of good growth so saunders just sorry just to be clear when you did the acquisition and you spent 100 grand or 300 grand about what percent of your total cash on hand was spent on that acquisition 50 percent 100 percent um it was not no we didn't spend a lot of cash on that there was a lot of a lot of the investment was made with with the stock as well okay got it so of the low six-figure deal is how you described it how much of it was actually cash um i think it was i don't know if that number is actually official though but i would say maybe maybe in the 25 to 50 range okay because what i'm trying to backtrack here is prior to in 2017 early 2017 you told me you'd raised 500 grand you entered the accelerator you raised an additional 150 right so you have 650 000 that you'd raise at that point but so i told you 500 then yeah so we had raised we raised a total of 880 or 900 or so for for total for pro leads okay fair enough so so you raise the capital you do the acquisition summer 2017 you bring on a co-founder uh let's keep going forward here up to the acquisition so the the brisk.io acquisition does not work what happened no no so that worked well and we and we were building and growing quite well during the accelerator at the same time as we were sort of uh going towards a demo day for the accelerator we were approached by outbound works so during dreamforce i had a beer with upon works founder or one of one of their founders ben and we were talking about our different strategies and goals for our companies and we realized that we were essentially trying to achieve the same thing which is automating sales development they had taken a a slightly different approach from this where they were attacking it from a a services perspective and we attacked it from a technology perspective so there and then we decided that okay let's try and make it a acquisition work and then we are you talking about ben mccarthy no uh ben sardella okay got it yeah got it sale there's a site called salesforceben.com which they're big fans of you his name is ben mccarthy this is a different ben you're talking about outbound works ben yeah so ben sardella he's a big he's yeah he's a big guy in the sales sales community so what happened after the beer so yeah lots of negotiations and you know i thought at that point that oh no this is just going to be a quick one but you know we were obviously focusing a lot because we are on the accelerator as well because we had a demo day coming um so we were talking with investors so we had a lot of invest good investor conversations um eventually we decided that the best chance for ourselves for a good outcome in the end would be to join forces with outbound works instead of raising the capital and running our own okay so it wasn't about three and a half months of negotiations back and forth um but we negotiated price and you know the future of what how would happen and and all those things okay so how did you at that point up to the acquisition your combined business your old business plus the burst style position you are still doing about 200 000 per year in revenue uh yeah sure okay well no no i don't know so not yeah sure i mean is that what was your revenue up up to the acquisition i don't remember that right now you don't remember how much your company was doing right before you sold it which was literally between 12 and 24 months ago i feel like that's a number that you would know like the back your hand uh actually no it's been a lot of water under the bridge since then i don't remember it was the early 2018 that we sold okay it's in february 2018. okay well if you are flat in 2017 and you said you started 2017 with about two hundred thousand dollars in ar you were somewhere in that 200 000 range yeah so how did you have the acquisition talks i mean was it based off a revenue multiple or some other factor oh wait what did you say 200 000 was that monthly or yearly so we were [Music] you told me when you came on uh in january january for a third of 2017 that you had 100 customers paying on average 150 per month which would put you at 180 thousand dollars in ar annual revenue at the beginning of 2017. you told me earlier you were flat in 2017. so if you're flat that means you're still doing about 180 000 per year in terms of run rate at the end of the year is that accurate that does sound very low though um so we were we were on we were closer to a million ar we were not oh no wait sorry i'm sorry i should have prepared a little bit better for this um let's just say that we were somewhere in the 200 to 500 000 error fair enough arr not monthly revenue ar annual revenue yes yeah which means you're doing between 160 000 a month and maybe 300 000 a month something like that sorry sorry not not that much sorry yeah you're you were doing 200 000 per year or up to 500 000 per year which would have been something between you know like 40k per month yeah 20 to 50k per month something like that yeah yeah okay so but my point in asking that question is what was the acquisition tied to was it a traditional kind of revenue multiple or something different uh yeah not a revenue it was more because we were sort of talking with because we were talking with investors it was more that like okay we have this in the one hand we have like we have the uh investment from investors in the one hand and we have the acquisition in the other like how where do we get the best uh best bang for the buck got it so did you end up selling for more or less than the capital you raised about nine hundred thousand dollars more yeah okay and and i mean like significant like to a 3x more than that or it was about flat like you got your ambassador's money back um so we had it so most of it was i would i can't say the exact amount but it was more than 2x the amount got it so the total deal price was more than 2x that called 900 000 you raised so called two you know 1.8 million but obviously in a deal like that you have some cash some earn out some stock i assume you had that kind of split correct yeah yeah so it was mostly cash but there was also stock okay got it of the total deal price are we talking like 50 50 like how much was stock first cash would you say i can't i'm not allowed to say that okay but but was it more stock or more cash you're saying it was more cash up front there were the minority piece that was stock yes okay um okay got it so then fast forward to post acquisition so you sell the company uh they buy you by the way they're not a massive company either right i mean so they had raised three million dollars right up to that point um they also now have exited as well we'll get to that in a second but what what did you do post acquisition do you stick around yeah yeah so i stuck around i became head of product at the company um we started developing this you know the instead of the the ferrari that we sold to the people with their license now we had professional in-house drivers that were driving the technology instead and but eventually we learned a lot of things from there as well i think that's another another podcast though going going into all those lessons learned but so did you stay at outbound works up through the acquisition when they sold in october 2019 yes okay and then did you stick with uh who bought who bought them so that's not official uh it's it's an announcement that is pending right now i asked them before before this if i could go out with the name but i wasn't allowed to um so we'll uh but okay i'm on ben the founder of outbound works linkedin profile right now it says acquired october 2019. so they're happy to make it public that they've been acquired but they don't want people to know who acquired them there's a pending press release that is being uh negotiated or whatever right now i i just talked with them like right before this about because i i knew that question would come and i'm sorry i wasn't allowed to say why did ben not stick with outbound works post acquisition that hasn't been announced yet sorry why did ben not stick he's currently ceo at rev shop yeah so it was an yeah i'm the only person that stayed that stayed on full-time why um because from a um it's a longer conversation but from a technology perspective um that's this new product that we're developing that makes a lot more sense within this new um owner um i'm i was i'm the one building that okay so the deal price that the new owner paid was contingent upon you the technical lead staying with the company to return just in the tech and keep building the product yes i see okay and how does that make you feel though that the guy that acquired you then sells his company he leaves and now you're the guy that's got to stick around and sweat it out with the new company no i'm for me it actually worked out pretty good um i get to still work on something that i'm i'm passionate on i get to help a new uh a new business in this space or not new business but i help a good business in this space and yeah i think it's pretty good very good so so how walk i mean walk me through other founders right so you raise 900 000 you sell for something like you said the deal price was maybe 2x that so call it maybe 2 million something you put your blood sweat and tears into for you know many many many years many people would say i'm not selling for 2x and after i pay back investors 900 there's only like you know a million left and it's not even all cash up front a lot of it's stocks so you're making i don't know i'm guessing here you know 100 000 maybe in a good cash position post taxes i mean why take the deal yeah though there's um there's a lot of decision there's a lot of things that go into that type of decision um i can definitely respect a lot of the uh you know a lot of those comments you just made about like what and i do see those um those thoughts coming through from founders and i definitely had them as well um we made the decision based on the options that we had at the moment we had name we had an option to to close our funding post demo day with uh with the alchemist and if we would have done that it would have been another three to five years of grinding hard work um with uncertain uncertain outcome um so that was like i'm completely on our own and then the second alternative was to join forces with some of the top entrepreneurs in the space um and like really really good people um and you know learn from that and and build a bigger business that hopefully would have had you know at the time we thought that that business would sell for way way more obviously um so that would obviously weighed in as well so when we looked at what we had we know in the one hand we had the you know couple millions closed funding or a couple millions in as an acquisition while we continue to build something that can be could be like a you know 100 million dollar company but then that company sold way faster than you expected for a price way lower than anybody wanted because ben's not with it anymore so i assume it was not a it obviously wasn't all rainbows and butterflies yeah yeah yeah obviously yeah no i'm just gonna say i mean these are the hard i'm asking these questions because you're this is information that most people won't talk about but it actually is reality for most people this is actually what happens in most cases that we never hear about it yeah exactly yeah all right anders very good let's wrap up here with the fame by the way when does the do you know when the announcement's gonna be made of who you're now working with it's like any week okay any week now okay very good well we will actively look for that in the meantime let's wrap up number one favorite business book uh what's it called the lean startup number two is there a ceo you're following or studying um elon musk number three what's your favorite online tool for building the company [Music] i would have give me a devops tool um well github circle ci okay number four how many hours of sleep to get every night uh at least eight and situation married single kids i'm married with a my first kid arriving in three days oh very wow very exciting wow that's impressive i got you for a podcast interview three days before your first kid i love that and uh you must be with 39 now 40. 40. yeah 40. very good all right last question what do you wish your 20 year old self knew [Music] focus on personal development guys there you have it pro leads founded back many years ago called 2014 uh grew grew it to about between 200 and 400 thousand dollars sorry 225 000 per month it's per year sorry in revenue then in 2018 after beer at dreamforce ended up selling that company for a cash plus stock deal to outbound works for something or caught between 1.5 and four-ish million dollars in that range uh then put it in an outbound works that company was then acquired here recently uh we don't know who acquired them but we know what happened anders is sticking on though in the meantime as he looks to scale in the space serving and helping sales teams get more leads drive the race car better make their demos go better and i'll ideally close more bookings and revenue honduras thank you for taking us to the top thank you you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data 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