Reclaim.ai Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Henry Shapiro. He's the cofounder of reclaim.ai, an intelligent calendar assisted assistant used by over 6,000 companies across the globe. Before starting the company, he led product and marketing teams at New Relic for five years. He's based out of Portland, Oregon. Henry, you're ready to take us to the top? [00:15] >> Yeah. Let's go for it. [00:16] So this is this is a super tough space. You know, x.ai came on the scene a couple years ago, raised a boatload of money, and then basically flash sold for an you know, no one made any money basically on that deal recently. Calendly is very hot there, I think on your cap table as well. What are you doing different in the space where you're seeing like extreme stickiness on your customer base? [00:34] >> It's a great question. So I think the first thing is, and thanks for having me by the way. Of course. The first thing is I think we really, when we started the company, our intention was not, Hey, let's go out and build a better calendar or let's go out and build a better scheduling service. [00:54] >> We came out of obviously New Relic and had experienced kind of the pain firsthand of being busy middle managers who were constantly just trying to kind of grapple to get every last little bit of time that we could for our priorities and constantly running into that challenge of the calendar sort of feeling like a debt you have to pay down every week instead of an actual reflection of the work you need to get done. And so [01:17] >> we actually came at this problem being sort of dev and monitoring nerds, not even thinking about the calendar. Initially, we only were thinking about this problem of like, how do you get people and teams focused on the right stuff? And I think because we asked that question first, instead of asking the question of like, Well, the calendar sucks, let's build a new calendar, or Scheduling sucks, let's build a better scheduler, we really tried to hone in [01:41] >> on the workflows and automation that people need, and we really leaned into the existing platforms like Google Calendar, like Calendly instead. And so I think part of what makes us sticky is we're not asking people to go out and adopt an entirely new calendar service or platform. We're not going out and asking people to adopt, in many cases, even an entirely new task manager. We're acting as sort of a hub for intelligently scheduling the time that [02:07] >> you need and keeping it flexible so that you're sort of able to accommodate other types of commitments. I think the other thing that's a little different about how we approach this space that kinda gets into some of the, call it the secret sauce of the product is we recognize that time blocking was one of those things that if it was just as easy as me going on my calendar Sunday night and blocking out every single event [02:32] >> and putting the word busy on it, there probably wouldn't be much software or much opportunity around this space. There's kind of two problems that people run into when they try to block their time out. The first is that it's not adaptive, it so doesn't sort of accommodate inbound conflicts. The second, and the one that we really try to address is it's just not realistic. If you're the kind of person who has a really slammed calendar, you [02:55] >> need to be available for meetings. You need to be available for collaboration. And actually, if you block out your whole calendar, you're probably creating even more work for yourself because now you've got people pinging you on Slack and saying, Hey, there's no time on your calendar. Can I get a few minutes? Can you move this thing? And so what we do is we actually kind of act like a circuit breaker for your calendar, where if you've [03:15] >> got plenty of time during the week to get your stuff done, we'll kind of look at that and we'll run simulations. We run millions of simulations daily against calendars and basically try to figure out like, are you running out of time to do this thing? And if the answer is no, we'll put the time down, but we'll mark it as free. In fact, when we scheduled this meeting, it overlapped with a habit that I had, but [03:35] >> that habit was marked as free and we're [03:37] What's planning to habit? Improve [03:38] >> The habit was reviewing PRs. I spent a lot of time here reviewing pull requests and, you know, making sure that the team's staying on track. Love that. And so that gets moved to later in the afternoon. And actually, got marked as busy. I was just looking at my calendar because reclaim was like, hey, you're running out of time to get this thing done. So I just think we're little more yeah. [03:58] The product makes sense to me. Just I wanna get as much as we can here in the fifteen minutes. So the product makes total sense to me. Take me a little bit into if people wanna use this thing, what's the average customer paying you per month to use the tech? [04:08] >> Currently, right now, we're a free product. Product. Yeah, we're pre monetization. We're being used, as I mentioned, across a little over 6,000 companies today, meaning we have anywhere from several to dozens to hundreds of users inside of these companies and we're spreading pretty quickly. [04:24] How do you think about like, and first off, do you have any need to put up a pricing payroll or how long can you go without charging? Let me look at your burn, your headcount, etcetera. [04:32] >> Yeah, we're in a good position in terms of monetization. We're basically, I'd say a couple years away from the sort of the edge of the cliff, and we're at a really good point in terms of product market fit and sort of the demand for the product. And so we've actually had a pricing page up on our site for two years. And we put pricing out there because we know that it's really hard for people to standardize [04:56] >> on anything if they don't really know what to expect once the thing becomes a paid product. [05:02] So how does that work? You have it up, but you basically have a cross tower. It says free through 2021. And is this basically enabling you to drive urgency so people are like, you're like, sign up this year because we're gonna charge soon. [05:13] >> Not only that, we have a referral program where you can refer people to reclaim and get future credit against paid reclaim. And that's actually been a really successful program for us. [05:22] That's super interesting. Now you can only afford to do this though, because you've raised capital, right? So talk to me about your funding story. How much have you raised to date? [05:29] >> Yeah, we've raised 6,300,000 in total. We had a pretty unconventional path, I'd say, to fundraising. We left New Relic. We had been working on this concept for a little while. [05:44] What year was that, by way? When did you launch, 2019? [05:46] >> We launched in 2020. Our first feature was January 2020, but we incorporated in June 2019 and we left New Relic in April. And so we were having a lot of discussions with investors kind of pre product. And we actually, I wrote an article about it on TechCrunch, if you're interested. But basically, we kind of got to this place where the story alone was not basically getting us to the terms that we really wanted to see and [06:11] >> to the investors that we really wanted to see. And so we sort of took a step back and we said, Look, we're pretty incremental people by nature, and we tend to sort of on the side of shipping to learn. And so we ended up raising a very, very small, well, relatively small chunk of money that was just basically enough for Patrick and I, my co founder, to basically start building the product. [06:33] How much was that, Henry? [06:35] >> We raised about a 500,000 on safes, and then we raised another million in safes about six months after that. Okay. That was 1,500,000 pre seed, That was essentially our pre seed round. And the safe route was nice because it sort of you know, kept the process pretty light. [06:52] Henry, why'd you have to do that though? I mean, look, I'm I'm a big fan. Like, obviously, if you're gonna go to VC route, gotta go hard on the VC route. You can also stay bootstrapped and, you know, go bootstrapped and have more freedom, you know, pay yourself in cash flow. Most people are selling 20% of their business the pre seed round. Guess I imagine you guys probably did something similar. Right? So why did you need [07:08] this 1,500,000? [07:11] >> Well, I mean, first of all, we needed to be able to hire our first Patrick's a Java engineer. I work a bit on the design and operations side of things, but neither of us was a full stack developer, and we knew that a big part of this was gonna rely on, you know, the front end user experience. And so we brought on our first engineer with that money and our first couple full stack engineers with that [07:32] >> money. You know, other kinds of normal things, it's it's nice to have health care. It's nice not to be, you know, super, super stressed about, you know, the the the change in in pace. [07:42] So you didn't leave New Relic then with a bunch of savings where you gave yourselves a year of runway to experiment with a new product? [07:48] >> We did. Mean, we weren't paying ourselves very, very good money. I I would say we were definitely in the sort of ramen salary category for a good long time. We did leave New Relic, I think, with a healthy enough nest egg to take the plunge. But obviously that also has its own stressors associated with it. Honestly, I think our biggest calculation was like, look, we really want investors at the table here who believe in what we're [08:12] >> doing and who believe in kind of vision of what we're going toward. And at the time, we didn't have a product and we didn't have users and we didn't have proof that the thesis would work. And so a big part of what we were trying to do was kind of bring a group of sort of people we had worked with in the past, people that kind of believed in us as product and growth people. [08:30] So how did GeofHarrison have their Redmond? Like at Flying Fish, did they know you've read Relic? How do you know that? [08:35] >> They approached us after we had actually started building. So that 500,000 basically took us to get our first feature out, which was this calendar sync feature, which we launched on Product Hunt. Got quite a bit of traction on that. And then we launched a feature called Habits. We launched the very early version of Habits, which at the time was literally just like lunch and catch up. It was like a separate feature where you could block time [08:58] >> for email and block time for lunch. And they approached us not long after that and asked if we'd be interested, we asked them if they'd be open to doing a smaller round. At that time, we were like, Look, we're building really quickly. Raising's awesome, but we're just not ready to take that step yet. We're in a really good groove here, And would you be open to doing a smaller amount of money on a safe? And then [09:20] >> as we get to the seed round, we'll, you know, we'll include you there as well. [09:23] Okay. [09:24] >> And they were open to that. [09:25] So 1.5 at I mean, what? Fair to say, like, $6,000,000 to $7,000,000 valuation or something like that? You sold 20%? [09:32] >> I'm trying to remember. I believe it was a capped note, and I think the cap was 10. And I think we added we added a discount as well. [09:39] Wow. That's nice. Okay. So you got little premium terms there because your history maybe at New Rel, if you you were close to the prom, that's great. Now you raised a little bit more after the 1.5. When was the last round? [09:47] >> Last round closed, I believe we announced it in May of this year, and that was for 4.8. And that was across index led the round, Shardul Shah at Index Ventures, and then Gradient, who we had actually spoken with in our first funding go round, came in and added some to it as well. And then we actually went through this pretty long process that I think made the round take a lot longer to close, but we, I think- [10:13] How long? [10:14] >> It probably took two, three months, I'd say, in total to get everything fully, fully, fully closed. Yep. A big part of that was that we brought 40 or 50 other strategic angels, including Tope from Calendly into the cap table. And, you know, it's it was one of those decisions. I think our our sense was like, this is really the time you get to bring those people into the cap table where it makes sense for them. And [10:38] >> so [10:39] How do you structure that, Henry? Because this is an art. Right? So you get a million or 2,000,000 committed from like traditional funds. What's the cold email that you send to Tope? What's the subject line? How do you get 40 of these? You have your hit list, your wish list. [10:49] >> How do [10:49] you get them committed? [10:51] >> I almost think of it more as like pools. You know, we've got, had pools of people that were in our network that we knew of, that we were like, These are great people we want to work with, and we think they might be interested in investing. There were people that the institutionals who we were working with introduced us to, including Shardul and at the time MZ from Gradient. Tope was an interesting story because Tope actually, we [11:14] >> met because Patrick hung out in a Slack channel where a number of folks basically mix [11:25] >> I on saying Mixpanel, Mixmax, excuse me, Calendly, a number of other calendar services hang out in there. We all talk about various bugs that we're running into with the Google Calendar API. There was this issue that had been plaguing all of us for two months where Google would just totally crap the bed every week or so, almost like clockwork. Patrick was part of the group that identified the issue, and he worked with Calendly's VP of Engineering [11:50] >> to troubleshoot and triage it, we knew we wanted to talk to Tope as part of our round. And so we said, hey, if be interested in introducing us to him, we'd love to talk to him. And yeah, we got along [12:02] with him That that makes makes sense. So forty fifty angels, and that's great. Obviously, power user base influencers, one to many sort of approach. As we we're running out of time here, so some quick stuff. What what what did you put in that seed slide deck, right, to show valuation growth from the 10,000,000? Because if you're only if you're not wanting to get super diluted, you've gotta raise 4.8 at, like, a 40 or 50 pre, right, [12:22] when you're pre revenue still. Right? So, like, what story were you telling in that deck? [12:27] >> I think the big story that we were telling was, a couple things. So the first is this is a sort of a nascent market where there is a lot of sort of I would call it sort of a lot of overlapping opportunity, and we're kind of right at the center of project management, scheduling, and calendaring, both of which are kind of these interesting and sort of growing markets. I think the biggest thing, though, that convinced investors [12:53] >> was ultimately user stickiness and user engagement. Were [12:57] So just seeing what was that? You 6,000 users, how do you define stickiness? [13:01] >> Stickiness for us is are people are people coming back on a regular basis to interact with the you know, are they basically interacting with the system day to day? Are they using it to plan their week? Are they relying on it? [13:12] So what are your weekly active users today? [13:15] >> We measure them in monthly active users. I could grab the weekly numbers for you, but our monthly active users today are about 16,000. [13:24] In terms When you said customers, you said 60,000, not 6,000, six zero thousand? [13:29] >> Sixteen. One six. [13:31] >> Sorry. How many when okay. [13:32] Got it. 16,000. You you call them customers. They're users. 16,000 users at least once once a month. [13:37] >> Yep. And that's and that was up from 4,000 about a year ago. Yep. [13:41] So that 4X growth, that's the main number you use in that deck to show your growth, show you're getting closer to product market fit, that sort of thing. [13:49] >> Exactly. Yeah. And I think also just the element of the problem we were going after was a little different than say, just scheduling or just calendaring. We were really oriented around this idea that the long term vision for the business wasn't just to be a productivity tool. It was actually to help organizations and teams be better aligned to their priorities. And so I think that story resonated with investors, but I think more than anything, they were [14:13] >> seeing that, you know, early signs of product market fit and early signs that people were depending on the product to actually plan their week. [14:21] Yep. You've launched a bunch of things. Right? Habits by reclaim. Actually, Justin, my friend at Yak. I'm a small investor at Yak. [14:26] >> Oh, nice. [14:27] Yeah. Love that tool. I use it every day. But you you've launched a bunch of these things, I think, to get out of just the, hey. We're we're we don't wanna be the next x.ai that raises a bunch and flops because we're not thinking about products. So makes makes complete sense there. And then look. I mean, fair to say that was at, like, a $35,000,000 to $40,000,000 valuation somewhere in there? [14:44] >> I [14:46] >> probably a little bit less than that. [14:49] But yeah. Okay. Fair enough. So you guys did take a bit of dilution there, but it sounds like you got some really incredible people on board. [14:54] >> Yeah. Actually, I mean, I'm pretty happy with where we ended up in terms of total amount raised and where we diluted. I think when we talked to peers in our space, we ended up diluting pretty close to where people where we expected to with a seed round. [15:08] 15% for a seed round. [15:09] Right? I mean, somewhere in there. [15:10] >> Yeah. Yep. Yep. Yep. [15:11] And what's team size today? How many folks? [15:14] >> 11 people, myself 11. Myself included. Myself included. [15:17] Alright. Cool. Well, this will be fun to watch as you turn on the paywall. I love the urgency you've created with, you know, free through May sign up now. And as long as they stay sticky, man, you set yourself up to have a paywall conversion rate that's really, really high once you do introduce it. So come back on in a year. Give us an update. But in the meantime, man, let's wrap up with the famous five. [15:33] Number one, favorite business book. [15:35] >> Good strategy, bad strategy. [15:37] Number two, is there a CEO you're following or studying? [15:44] >> Honestly, [15:49] >> none none comes to mind. [15:50] Number three. [15:51] What's your what's [15:52] your favorite online tool for building reclaim besides your own? [15:55] >> Favorite online tool for building reclaim. It's kind of a lame answer, but Intercom keeps us connected to our customers. [16:01] Alright. Number four, how many hours of sleep do get every night? [16:04] >> Between five and six. [16:07] Alright. [16:08] In situation, married, single, kids? [16:10] >> Well, single with a partner, I should say. Partner. For tax purposes, I'm single. [16:15] Man, any kiddos or no? [16:17] >> No kiddos. [16:17] >> No kids. [16:18] And how old are you? [16:20] >> I am 32. [16:21] >> 32. [16:22] Last question. Something you wish you knew when you were 20. [16:27] >> It was not a huge mistake to major in history. [16:31] Guys, there you have it reclaim.ai, a new approach to claiming your calendar. They started, call it two, three years ago. They've got they had 4,000 users about a year ago, now up to 16,000 users. A 4.8 seed round raised recently. Team of eleven as they think about what a calendar in 2022 should look like. Paywall not launched yet, but they have had a pricing page up just to understand user sentiment around pricing, using it right now [16:53] as urgency to drive those new users who stay pretty darn sticky. We'll see what happens in 2022. Henry, thanks for taking us to the top. [17:00] >> Thanks so much. Appreciate it. [17:03] 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 [17:28] 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 [17:50] 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 [18:12] 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 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 have to counter those people. [18:32] 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.