Reveleer Revenue & Funding (2024)

Introduction to Reveleer's mission and growth guys revier launched back in 2013 they are selling specifically to Insurance businesses and then also doctors and folks on the front lines to say Hey listen when that doctor's seeing a patient focus on The Chronic heart issue which Jay knows he can Surface because of health records that he sits on using a little bit of machine learning AI room to do there but he scaled nicely uh Reveleer's revenue milestone of $51 million broke 51 million bucks of Revenue last year with about 10% eitaa margin the year before that about 25 million so doubled over the past 18 months hoping to break 100 million this year that's the stratal we're rooting for them funding the business in a very Capital efficient way keeping Equity New Deal done with Hercules I can't talk about Jay specific deal but Hercules Public filings they're usually targeting a 15.5% all--in weighted yield and 11% headline rate sounds like they got a good deal done here as Jay's going to hopefully use that money to go fund future Acquisitions as they look to continue to expand ACV which they've done over the past three years expanding ACV almost 3x to n uh to $900,000 in annual revenue per average employee hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with BWB software Founders so far we've invested in over 400 software Founders totaling $50 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview hey folks my guest today is Jay acman he's an Enterprise software executive responsible for setting the vision strategy and objectives for reveler as a leader he's also keenly focused on shaping and stewarding the culture at the company to attract a robust collaborative team while driving an Innovative mandate to accelerate value-based care mission to make this really specific uh reveler is a data and analytics platform for healthc care so Jay Ackerman discusses the importance of AI in healthcare analytics super specific we're going to jump into it today Jay you ready to take us to the top yeah can't wait Nathan let's go we were just chatting pre-show our first chat was all the way back five years ago in 2019 you said you relistened to the episode last night did you get most of the predictions right uh more right than not yes yeah I think the one as I mentioned to you the one we didn't get right is uh we thought we would 2019 with a business that was generating positive cash um and we didn't hit that point until 202020 2023 but we're there now and really excited about how the business is performing so just to be clear last year in 2023 you guys ended up ebit dep positive cash flow positive at the end of the year we did yeah that's incredible congratulations now um I have a bunch of questions in terms you're doing a very a lot of very unique things you've raised a large round from Hercules in a down Market you have successfully executed that I know of two Acquisitions a lot of Founders love the idea of inorganic growth Fe Acquisitions but then they fail with the Integrations I think you've done a really nice job I want to dig into that but you've also have a really efficient capital structure I think but before we dig into any of that let's talk about what we love which is your customers what are they buying from you what are you selling yeah and and one of there's been a um one major change in our customer segment since we talked in 2019 so we're selling a made an analytics platform to payers insurance companies and risk bearing providers think Health Systems hospitals doctors who take risk to support value based care and so those are our two market segments and they're buying a software platform that helps Expansion into insurance and healthcare, and its impact them understand their patients Health uh and how well they are performing and delivering highquality care to them and so help me just to be clear again you're selling directly to the insurance companies for the data and then you're selling something else to the doctors in hospitals the first the front row folks is that right yeah yeah so so think a a Doctor Who's going to see a Medicare patient when that patient walks into their office they can pull up in their EMR uh a um a result file from us that's going to say hey Nathan's here and we want you to focus on these three specific medical conditions that our AI has identified from a wide set of data that we've captured that uh the things might be going on with him so it allows the doctor in that 14 to 16 minute visit to be more efficient um to potentially capture uh a condition that they may have missed and ultimately leading to better care for the patient so yeah that's a new offering for us I mean Jay I go to my primary care uh doctor once a year and they don't remember the stuff I told them 12 months ago how do you sit on enough data to be able to tell the doctor focus on these three things about Nathan because we learned about these four years years ago from this other data set we sit on yeah well so the thing that you know you've probably experienced this um something pops up for you and you'll go to an Urgent Care setting you might have a prescription filled from CVS you might have it fulfilled from a local small Pharmacy you may then go see a doctor out of network and you have a lab done and so that data does not is not Consolidated How customer growth influenced revenue and contract value in an easy format we're able to sweep uh we we identify like a geography based upon where you are how many miles we're going to sweep all the Care set settings that exist pull that data in we're really successful we can capture uh incremental data on 90% of the patients that kind of run through our platform but the challenge is when you get all that data you better be really good at mining it because you can have thousands of pages of data so we take that thousands of pages of data and we synthesize it down to the top two or three things uh and if the doctor is curious and does doesn't understand what we're suggesting they can click in and go exactly to the the precise spot in one of those records where we're drawing that conclusion okay so let's just use me as an example real quick so like I'm making this up right but it's for the sake of the example last last year I had strepped throat I went to Urgent Care I didn't go to my PCP because she was too slow right they were too slow to see me I went to Urgent Care it's only four miles from the PCP it's 12 miles away what public data set are you able to use to know that I purchased cough drops or nval Nal spray at CVS because the Urgent Care prescribed something yeah well we're connected into um uh a couple of the major lab systems Pharmacy data companies so we put your name in we can pull what data they have on your prescriptions that have been fulfilled what are those big ones can you name the top three um uh you know there's you'll see a lot tied to diabetes like you know in our our Target segment and health heare Medicare patients uh and Medicaid patients those are our two biggest segments so Medicare you're going to see people with um diabetes uh chronic heart condition kidney disease and so that those are those are examples of the let's call Top Detailing Reveleer's strategic acquisitions conditions that stand out obesity morbid obesity so you'll scrape data that'ss related to those things not like strep throat from a guy like Nathan at the CVS no no I see yeah more chronic you know things that are going to carry you know kind of year to year okay I think our audience now clearly understand sort of what you're providing to customers that was extremely helpful help me understand how You' how you've priced this so how what does an insurance company pay you and what would the doctor or the hospital pay you yeah so our pricing model um is has shifted from our last discussion predominantly to a per member per month model so that health plan that Prov provider they'll pay us a set dollar amount for every number every one of the patients in their care um and you know we we build them we build them quarterly on that okay and they run their businesses under those models so that's a well understood model and and running a Health Plan it's a well well understood model and running a large Health System yep yep okay so yeah that makes sense and then when you're signed to an insurance company what does that what does that package look like same thing it's it's a per member per month ah okay okay so both so it's two different segments but it's the same sort of pricing model per member per month quarterly yeah okay and what what did you I forget pardon me where what did you switch from what were you were you doing we were predominantly in a like um s of it like a cell phone uh cellular plan model where you would pre purchase units on our on our platform so you would prepurchase if you had if a Health Plan had 100,000 members that they were caring for they would pre- purchase um they might look at 25,000 of their patients and so they would pre-purchase the units and if they went over that we'd build them incremental um overages I see I see it's harder it's harder for them to model that it's harder for them to manage kind of the those overages that you know would often show up yep and I remember back in 2019 you told me that you were serving at that point about 30 I don't know whe if the concentration was insurance companies or doctors or hospitals but it was 30 of that group combined where are you and can you give an update on that number today yeah sure so we're um we're approximately 80 uh 80 customers today yeah up from 30 um and our average contract values continued to grow um to where we're approaching uh 900,000 annual contract value per customer we have to dive into this so guys you you do not do not stop listening to this and I'll tell you why Jay's ACV back in 2019 was about 274,000 so he's more than he's not only tripled he almost tripled his customer base from 30 to 80 he's also tripled his ACV so I want to dive deeper here now Jay on how you've done that was it was it inside product development with your engineering team or do these two Acquisitions that I read about come into play here yeah both uh so yes we continue to build uh product internally and we've had some phenomenal Innovations using AI in our product uh but both Acquisitions Dynamic Healthcare which we acquired in uh beginning of early 22 and MD portals we acquired in The role of debt financing in growth strategy 203 are allowing us to sell uh a more complete solution and are giving us an opportunity to go back and expand our footprint you know as we've proven oursel inside of the customer segments that we've been talking about one of the traps Founders fall into is they go say yeah if I just had more money I could go buy these three companies and they put together a beautiful Excel model and they say yeah once the acquisition is done we're going to cross sell and arp's going to expand and the team teams are going to have no cultural issues at all and the Texs are going to match it's going to be perfect how do you model an m&a process before doing it to try and drisk the operational integration that has to happen afterwards yeah yeah it's it's simple right uh like the 80% Acquisitions fail that's true yeah uh I mean a couple things for us we uh our acquisition strategy is centered around identifying product that rounds out the solutions that we're offering today so when we do that we're effectively expanding what we can offer to the same buyer so we're not asking our sales team to go learn kind of the buying pattern of a new executive inside of a health system that has nothing to do with the people that we're currently talking with so that's kind of number one um we did in our first acquisition acquired a more dated Tex stack and we took traditional kind of uh data center hosted um Tex stack we've migrated it to AWS and and which company was that Dynamic healthare yeah so we moved it into AWS we modernized the tech stack uh now the same uh single brand so the experience for the customer is they're seeing one one company the data flows across the both applications culture culture is is B is important Dynamic was a slower moving company when we acquired it 38 about 30 38 on the team when you bought it uh yeah probably actually a little smaller than that um and uh and we in the first 12 months of owning them we sold more new business than they had sold in the prior five years and the reason I call that out is because all of a sudden we were asking everybody to run a lot faster to move a lot quicker and how we were standing up new customers operationalizing it um and for some they weren't you know they weren't used to that some didn't really want to do that we had some people who self selected out didn't want to move at that pace uh we're really excited about the way that team has contributed and and some of the uh the talent that has has risen up um but yeah that wasn't for everybody MD portals the second acquisition much more culturally aligned in the way we operate and the way we move in fact they probably have challenged us to move a little faster how many people on their team when you bought them yeah I mean there was a smaller team it was a team of uh sub1 15 okay okay so I mean both these companies it looks like were bootstrapped in under three four million Revenue when you bought them is that a fair statement uh fair for acquisition number two acquisition one was a cash generating business of about uh 7even eight million of ARR like it was wow it had been it Equity vs. debt financing: Jay's perspective had flat it would have been a flat business for a long time that's impressive though because if they were under 30 FTS when you bought them at 28 generating 78 million bucks of Revenue that's a cash machine I mean the revenue per employees are the roof Ro that's like record numbers but they were bootstrapped right um friends and family backed yeah you weren't dealing though in your negotiation with some VC that said Jay I want a 100x return it's a billion dollars for the m&a deal or bust no no yeah interesting by on the acquisition front both of them were companies we had established Partnerships with so we we understood one another we knew how our products were going to work together we were already out selling them in the market and it made a lot of sense to just go quicker and move acquisition yeah this makes a lot of sense um um how did you make sure I mean do you have a history at other companies of doing m&a like how did you make sure to get that first one right are there any sort of a piece of advice you give our audience Consultants you use things like that um I I have done um m&a in the past I wouldn't say I mean I've done I was a seller I sold a business uh I was a part of buying uh two three other companies in the past so a number of experience but not you know not double digits look I think what's most important is the product you got to have product fit you can't do it for financial engineering purposes if you go down that path uh yeah your numbers might look nice for a little while but it's going to break down um so and and we had to have the um the resources internally that could support the integration work so the one thing we we brought uh a consulting firm in to work with our team to build the Playbook with Dynamic that we could use in acquisition 2 and then whatever comes in the future we we expect to do more Acquisitions which is why we did that raise with Hercules that you noted but we built a Playbook um to make who did you can I ask Jay who you used which consultant we used we used a consulting firm I think they're headquartered in Tennessee uh called enora enora and they specifically helped you build sort of hey after you buy the the company do this on day one do this on day two do this on day three that kind of thing yeah and and build the tooling so that we could then manage a broad set of workstreams um you know we would have the sales you know marketing integration workstream right we had the back office work stream on how we were integrating like day one finance and HR were integrated sales and marketing was the next stream to to integrate then we had kind of a slower role around product uh Aiming for $100 million in revenue: strategies and challenges and Technology so they helped us kind of align that create the playbooks that we could execute create the the the methodology in which we would manage a steering committee and track the synergies that we were expecting whether it's cost synergies or Revenue synergies yeah and this is just to be clear I want to make sure I give the right resource to my audience it's k.com and Cura yeah yeah you got it okay okay interesting that makes a lot of sense okay so those were the two m&a deals um I look I'm obviously running the O numbers in my head trying to guess your Revenue you also seem to be pretty transparent are you comfortable sharing you guys are at last year where you finished at yeah sure yeah and I think I've shared them in some other settings so uh in 2022 we um we were 25 million of Revenue 2023 we were uh 51 almost 52 so we doubled from 22 to 23 wow and uh uh and if our team executes well we'll uh deliver like numbers 24 you think you can double again this year you can break 100 million this year in run rate by December it's our our Target yeah yeah it's a good it's not it's not it's not our board it's not our board plan it's not our board plan but it's yeah hopefully your board plan is 30% under that right yeah there's there's there's some cushion talk to me about Hercules because when most people think about Hercules they think about debt was the 65 million pure Equity no actually it was debt so it was all debt we um it was all debt um we U now that our business is generating cash uh and we have really good understanding of the unit economics of our business um we wanted to raise a debt facility to support m&a and so Hercules uh is we actually had great deal of interest uh from a number of parties to back um this this Vision that we have for building a broad-based value-based care platform an operating system for Value based care um and so that 65 million effectively aligned based on ARR at really attractive terms yeah yeah know this makes a lot of sense I mean so so one of the things that I like to do at the end of every quarter is I go study all the 10 q's and and and and 10ks from the public trade at bdcs thankfully Hercules is one of those so we can see all their deals for example they gave sense a $ 34.3 million loan at 11% headline interest rate now obviously sense has raised 270 million bucks of equity with estimated revenues about your same size 72 million they also gave a couple lines to others but this this deal will eventually show in their 10q I'm wondering if we able to share with us like the high level rate you got on that facility uh well you know I I can't I can't disclose the actual rate but let's call it it's it's in the range of what you just called out okay yeah one of the things one of the hits that Hercules gets so maybe you can defend them here if your experience has been great is they charge pretty substantial exit fees they specifically charge sense I want to make sure I get this right right a 2.55% exit fee on one deal then a and then a 3.45% exit fee on their deal they did with suie another SAS company how did you think about exit fees and was that a big deal was that a big deal negotiation point for you uh it certainly was a big deal because we um we were thinking about what our U next financing step is and when another investor might enter and if another investor entered in the uh near-term Horizon would we pay that down and what might that rate look like uh on a blended basis so first off like what was most important to us is the total interest expense that we're going to pay with frontend fees backend fees carrying fees and straight borrowing costs that's number one yes we were focused on the exit fee and and U we were able to lock in at a rate that we felt comfortable with and yep um across the the total borrowing um very healthy for the environment that we're in according to Hercules last 10 Q which would have been the 2023 Q3 number they had approximately 3.3 billion of AUM of which 25.4% of that exposure was to B2B SAS representing about 840 million bucks of exposure this is a significant Addressing operational scalability and integration post-acquisition position for them uh this deal they just with you in a sense you sort of own the bank uh that must feel pretty good uh they also say he's smiling they also say that their target weighted average yield is about 15.5% so to your point if you're looking at a headline rate of 11 12% they're going to get their Fe somewhere around that 15 over time did you sort of see that when you ran the all-in cost to Capital you're sort of in that same range um our all in is uh I think in the lower end of the range so yeah you're a better you're a better risk company than most in their portfolios you're saying that in a nice way yeah look we um I mean if you feel the kind of peel the top off and look into our economics like we are running a good business we've been efficient stewards of capital that shows up I think our risk profile is really interesting um and not there are not a lot of companies right now that are growing uh doubling and increasing profitability and so doing both of them puts us in a position where we can you know ask for more favorable terms I complet totally agree with you I absolutely when you do 51 Million last year what was your ebit margin are you talking like 5 10% or barely profitable uh we were just below 10 I mean that that's that's amazing did you KN you know you were going to go to market with a that deal so you want to make sure you could tell that that profitability story there you know actually that the debt no actually that wasn't the plan um we um I would say Q3 we kind of felt really good about the way we were running the business and we went to our board and our two primary Financial sponsors upfront Ventures and Oak hcft and said hey we'd like to raise a death uh debt round um to support moving a little faster on the m&a front and they got behind it so it wasn't it wasn't part of the plan at the beginning of the year yeah were you refinancing out any other debt or is this your first debt exposure at the company uh we had we had like a sub2 million of debt that's like nothing yeah yeah so how does it feel I mean a lot of Founders they read about VC and the paper and the Billion Dollar Deals and I'm like folks never calculate the cost of giving up all that Equity it's like man if you can use debt and keep it you're going to it's going to be way better but I'm biased I run a fund that does this let them hear it from you yeah look um I'm I'm a shareholder uh I've uh I was really excited to bring Oak in in 2021 um they've been a transformative partner but they stepped in with a big Equity position all of a sudden I took a look I'm like wow my you know my stak's gone down quite a bit and uh yeah look I mean as you as you build you want to make sure that um you know you got to think about both the equity you know Equity is expensive but um it allows you to sleep better at night and so you go down the debt Road you got to make sure you understand it and yeah we feel great about what we bu what we're building how we're trying to use equity and debt um and yeah we're excited to go from you know we're looking at the next kind of Milestone of 200 200 plus million well we're rooting for you I apologize I got so into this I lost track of time I want to be respectful of your your end time here so let's wrap up with the famous 5j number one your favorite Business book uh well I'll I'll use it um I'm not going to say favorite book but I'm going to share a book that recently read called breathe which a great read about brown right yeah no no breathe um not not brne brown but the book breathe which is really about the art of how you breathe so it's a worth it's a worthwhile read oh James yeah it's great fantastic yellow The significance of company culture in Reveleer's success cover yeah okay very good number yeah go ahead you have another one no no go okay he's he's got his things prepared I love it number two no actually okay is there a CEO you're following or studying uh yeah look I um yes uh I'm focused really heavily right now on service now uh and I think what they're doing is fantastic and you also look at how um AI has played a part there and when Bill McDermot left sap to go to service now I kind of shook my head and I said I didn't get the move and I I love paying attention to what they're doing and how he's leading that company number three what's your favorite online tool for building the business uh favorite online tool I gotta tell you I'm pretty obsessed with the chat GPT is my like go-to app on my phone right now so it's helping me be a more efficient CEO yeah everyone says they're using AI now and their stuff you are sitting on a lot of days so I do believe you do have some sophisticated stuff on the back end but do you feel like like if you're if if 100% is you're using AI to its full potential at the company already it's fully installed it's cranking like what percent do you think you're on the way there oh I think we're as proud as I am of what we're doing I think we're 30% of the way there 25% of the way there yeah a long long way to go yep number four proba keeps me up at night because I think there are small companies who can get birthed overnight and and very quickly make claims that they can do things that we're doing or things beyond what we're doing the nice thing about you built though is I imagine the Big Mo part of the moat that you sit on is getting access just to the data to train these systems is difficult you already because your Sid have access to unique and prioritary data sets in the space for Medicare Medicaid diabetes chronic heart Etc a startup wouldn't be able to necessarily tap that as easily as you it's harder to tap that and the other Moe we have is it is very difficult to win business with health systems and insurers and so to have 70 of them under contract that gives us a pretty wide mode yeah yeah all right number four how many hours of sleep do you get every night uh six and a half not enough yeah situation married single kids uh married two boys 14 and 20 oh busy guy and how old are you uh 56 56 years young take us back last question something you wish knew wish you knew when you were 20 uh what do I wish I knew when I was 20 um I think that what I wish I knew when I was 20 the value of being in a in a company with great talent that'll push you to be better at what you do guys reveler launched back in in 2013 they are selling specifically to Insurance businesses and then also doctors and folks on the front lines to say Hey listen when that doctor seeing a patient focus on The Chronic heart issue which Jay knows he can Surface because of health records that he sits on using a little bit of machine learning AI room to do there but he scaled nicely uh broke 51 million bucks of Revenue last year with about 10% eitaa margin the year before that about 25 million so doubled over the past 18 months hoping to break 100 million this year that's the stretch goal we're rooting for them fun the business in a very Capital efficient way keeping Equity New Deal done with Hercules I can't talk about Jay specific deal but Hercules Public filings they're usually targeting a 15.5% all--in weighted yield and 11% headline rat sounds like they got a good deal done here as Jay's going to hopefully use that money to Gund future Acquisitions as they look to continue to expand ACV which they've done over the past three years expanding ACV almost 3x Jay's closing thoughts on the future of Reveleer and healthcare technology to n uh to $900,000 in annual revenue per average employee uh per average customer Jay thanks for taking us to the top

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 jay ackerman he's the ceo and president of a company called a revolution in his role he's responsible for fostering product innovation accelerating business growth and scaling operations to propel the company's impact for health plans they're a sas platform focused on value-based care all right jay you ready to take it to the top yeah for sure nathan let's do it so what does that mean what's value-based care yeah so um as you've probably been hearing a lot in the news there's been a shift from from feep uh uh you know uh fee for service you know with a health plan you go in and see a doctor they'll charge you a fee whether or not they actually take care of your ailment and so the government's been pushing for value-based care trying to ensure that providers doctors hospitals and the health plans are working to ensure that members get healthy and stay healthy and so we play a part in uh in supporting that okay so and so what does the platform look like and who's buying it's the hospital the patient too yeah perfect so uh we have a cloud application that's uh used by government sponsored health plans so that would be health plans that are participating in medicare medicaid aca or kind of affectionately known as obamacare and they use our platform to engage with providers doctor offices health systems and hospitals to capture critical information on members to make sure that they can demonstrate to the government that they are doing their part to ensure that their members receive proper care stay healthy and they insure a balanced set of members so jay who who is they though is it is it literally the hospital down the street here or is it somebody else oh well so our our customers specifically it's a health pla health plan so national health plans like uh anthem uh united are are people that we target our customers down to uh regional health plans and local local plans that might be in your city or your local market got it that's helpful okay good so they're paying you and how do you set up like what are you price based off number of patients you know quality care seats yeah so perfect we um we have a couple of different pricing arrangements some are what i would consider kind of typical enterprise agreements where they can use it um as much as they want as broadly as they want but our typical pricing model is based on what we call a chase which is affectionately effectively the um the particular member that they're trying to capture information on so we will know up front how many members they're trying to capture information for over a given year over a given year and then we set pricing around that so we have kind of a per unit uh pricing model what does that mean though so anthem comes to you you close and they say hey listen jay we want to capture information on 10 000 members members of what and how do they get the information yeah so they'll say hey we um in the area of risk adjustment we want to go out and capture records on 50 000 members that sit across five states not what are members though like that's not interesting sorry member like you consider that member would be uh a patient right it would be somebody who is insured by that health plan okay someone insured by anthem yes why don't they already have all the data on that person they're already a customer of anthem well so um i mean you hear a lot about this like the interoperability within healthcare and systems that don't speak so doctor offices uh hospitals they have lots of information sitting on each of the individuals that walk into their building to receive care and that information is not shared very well back to the health plan okay got it so they are anthem is using your technology to get more information on their own patients uh yes on the members that they insure yeah which would yeah they don't they don't think of them as their patients right they think of them as insured members yeah okay very good that's helpful understand and then so help me understand on average what what is no obviously don't talk about anthem's actual contract but on average what are these companies going to pay you per year to use the tech yeah so today we have about 30 customers um and on average we earn about 375 thousand dollars per plan that we cover and services revenue and about 275 000 in sas revenue so we have both the services model and the sas model okay so so uh one of these 30 customers like anthem would pay you on the sas side about 225 000 per year on average to use the tech yeah and that number for us has uh i've been going up uh pretty pretty significantly year on year yep and that's okay so that comes out about 23 000 per month across those 30 those 30 customers now if i multiply those 30 customers times 22 grand a month i mean that puts you at what is it like 680 grand a month in revenue just on sas uh yeah yeah just on sas that's probably that's a good number okay i mean is that accurate yeah okay so that would mean you guys are running essentially an 8 million dollar arr right run right sas company and then you've got another 30 juice on top of another 2 million or 3 million on setup fees professional services yeah perfect you your numbers tie out great sweet that's great okay so that's the company now you mentioned this has been expanding over time so take me back to day one when did you launch the company what year yeah so uh well there's probably two day one so i i i joined the company in 2016. i'm not the founder i got uh hired by our investors to take a business that they had a lot of faith in where they thought they needed somebody who had more scaling experience so i jumped in in mid-16 and so there's kind of the chapter that's been written from 16 onward but the company was actually launched back in 2009 more as a professional services business that started to morph into a software company uh so the company's been around a while but but i like to think about kind of what's been happening over the last three years between 2009 and 2016 how much company did the capital raised before you came uh close to eight million dollars eight million raised and how much total today raised uh just under 18. okay why did you have to raise an extra 10 why couldn't you come in and fix stuff and get cash flow pumping and not have to take extra dilution yeah so um you know we're solving a big problem uh we're solving a complicated problem working with health plans require technology that is highly secure and i would say the other part is we to support the health plans and to solve a problem across the area called quality and risk adjustment are effectively while they're like products they're different products and so from a product development standpoint requires a lot more capital got it okay so i assume obviously you raise additional capital now you're burning capital to drive growth is that accurate are you cash flow positive uh we will end the year uh cash flow positive okay that's great today though like last month are we talking burning like a million a month or 100 grand a month or how close to your oh no yeah i think we've been really great stewards of capital so we're burning about a hundred grand a month oh that's not okay that's not bad at all and what's your team size team size we've got uh today about 80 people full time okay how many engineers uh 15 engineers 50 you know these numbers you've listened to the podcast before haven't you yeah well look like anybody who's worked with me know i'm a numbers guy so i like it i'm right up my alley i like you when i interview another numbers guy that's good or gal alright so 15 engineers and at this price point i imagine you have serious kind of field sales operations how many quota carrying sales reps yeah so we actually have a small team but we're expanding it we have two quota carrying reps uh but our sales leader also effectively carries quota as as uh as does effectively anybody at the senior team right we're all kind of play a part well so jay 80 people full time 15 are engineers two are quoted carrying reps who are the other 60 people yeah so all right yeah so those um we've got on the product side we got a team of six um and then our operations team we've got about 50 people now so you know we talked about the 10 million revenue um you know we have business under contract to have that number be about 70 higher next year and so the 50 and ops are effectively supporting that new growth that's already been solved what is it i don't understand what that means in your space what does an opa mean uh so our operations team so when i talk about you know we have to capture information on behalf of a health plan and and look like you know from a standpoint of like our business we're trying to disrupt a tech enabled services model that's really heavy with people and so our competition will reach out with um they'll have people calling provider offices a doctor to request a medical record to be sent in on a member that information has to come in and be reviewed to make sure that it matches the member that they're seeking they'll then attach it into the system then it gets reviewed by a certified coder or abstractor and we're trying to continually take out that layer of work and try to automate it and so right now our team of our operations team is about 50 and those are the 50 people who call on providers to get the record and review the record and attach it into the system so i imagine if your operators do a good job onboarding new customers you see great expansion revenue so if you look over the past 12 months let's peel back that onion what was gross revenue churn over the past 12 months uh so gross revenue term we were about 90 gross 90 retention on a gross basis okay so 10 gross revenue churn and then how much expansion on that same cohort uh 150 okay so just to be clear the customers you had ignoring new customers over the past 12 months just the customers yet from exactly a year ago 10 to their revenue churn but that same cohort of customers you up sold 150 percent of the revenue is that accurate uh that's accurate that's great okay i mean so that's obviously i mean that's like 240 net revenue retention uh i would put that definitely in world class the question is can you do that at scale yeah so we think we can and you know we look at the 90 um retention and and i would say that that's not something we're we're satisfied with and and so we think from an improvement standpoint we can drive that up towards 95 through some improvements in product additional capacity in our customer success team and then just maturing kind of how we sign up customers and making sure that we have the right fit on the front end and we've appropriately identified the solution 30 customers at 225 000 a year or 23 thousand dollars a month puts you again right now about 700 000 per month in just sas revenue what was just the sas revenue about a year ago do you remember yeah so a year ago it was uh maybe two million okay got it so about 160 000 up to 100 basically hundred sixty thousand up to seven hundred thousand yeah yeah that's impressive okay good so basically what you're telling me then is if you had a 100 sorry 150 expansion on 160 000 you had exactly a year ago right so that takes you up to about 350 000 the rest of the new the rest of the new revenue growth the other 350 000 basically came from new customer editions correct yeah interesting so how many customers did you have over the past 12 months uh we've added uh half a dozen customers half a dozen six okay interesting that's i mean again really really really nice story there so six new customers and how are you getting these customers at the field sales knocking on doors yeah so we have a field team out there i mean the the beauty of our market is it's easy to identify all the customers that we can sell to there are effectively 2 000 health plans across the country that participate in medicare medicaid and the commercial exchange so we take an account based uh marketing approach for the the top players and then we work through um sale various sales campaigns with integrated email campaigns blogs we have our own podcast and we try to weed those together and time into some important trade shows that take place throughout the year to bring customers to us and make sure that they know who we are and what we're about so when you add all these things together to get these six new customers what do you put your fully weighted customer acquisition cost at for a new 300 000 year plan yeah so um our actually customer acquisition cost is is pretty low um and it's probably low because we we have we would like to invest more but i would say our cus fully loaded customer acquisition costs with all of sales all of marketing uh commissions in there trade shows about trade shows about 20 25 oh a first year acv or your total revenue a first-year uh acb got it so 25 of 300 000 bucks a week you're spending about 75 000 to get a new 300 000 customer yeah and and i would say as we look into next year we're looking to expand our customer acquisition cost yeah what um i mean it sounds like a pretty capital efficient business are you looking at raising capital right now uh yeah we're in the final stages of a capital raised process that's great i mentioned i know you said you're announcing this friday this will be out obviously by then so how much how much are you raising uh so it's it's still a little bit in flux but um but we're expecting to raise uh close to 10 million dollars and why do you need to raise 10 million bucks with such healthy unit economics 240 expansion three-month payback period you don't have a cash gap yeah i mean we we think there's an opportunity to build a really significant business and um and we're we have um when i came in 16 and 17 we were playing uh kind of defensive uh a defensive game shoring up the foundation of the company and now we've got a lot of momentum behind us and we want to be much more aggressive and we think there's an opportunity to to to move faster and um and one of the you know with the new investors we're bringing on we have a lot of support to to build something large uh and impactful in the healthcare space jay what percent of the company do you think you'll have to sell to get 10 million you know new dollars into the company are we talking like 10 20 of the company uh you know so typical kind of like i look at typical cap raise kind of you know 20 20 30 percent okay got it so you're looking again like a 50 million dollar pre-money valuation 60 million post money something like that yeah i think that's um you know that's close and do you feel like that's fair with 8 million in terms of true ar annual you're looking at about a five six x a or multiple uh it depends on you know depends on the day but uh you know we wouldn't be taking that money in if we didn't think we had the right um you know the right valuation and the right relationship how'd the firm incentivize you in 2016 to join the company you're a guy you look healthy you can do anything you want right it's not your baby i assume they have to give you a significant portion of equity to get you to come in correct yeah yeah i probably asked my wife that question but um you know i i i was an executive in a publicly traded company and um i really want i was uh most recently guidance software which is in the endpoint security space i was chief revenue officer um i want to take the opportunity i wanted the opportunity to lead a company i thought there was a good fit here with what the reveler was up to and was happy to take a really significant cut and and w2 compensation for equity and so um you know with our key investors upfront ventures uh uh you know key player in southern california and we work to ensure my you know my stake was aligned with theirs so you know heavily equity laden you know relationships more you got more or less than 20 of the company oh less than that less more than 10. um you know that's close okay we'll call the reason i'm asking is this if you sell 20 a company let's say you let's just make the math easy let's see at 10 of the company right now i mean you're taking a two percent cut right on on that dilution i mean there are so many ways you're doing about 10 million a year right now in a revenue total when you add your sas post professional services why not go use non-dilutive debts you save personally for yourself being self-interested you save your two percent yeah so we're um uh it's a good question um you know i think the uh the two percent um the 20 you know haircut for me or for members of my team i think we're willing to do that with the investor set we're bringing on who uh we're bringing on a key investor that knows our space extremely well and i think can play a significant role in how we scale uh and then on the you know the topic of venture debt um we are um we do have venture debt um we have uh a term loan and we're also um we will have an ar line going forward uh to support the cash flow needs of the business who did you get the term loan from was it an svb deal uh we we're current svv bankers yeah but did you get a term loan i mean you can bank with sbb and not have a terminal yeah so we have a term sorry we have a term loan with them and and with our cap raised process we're also evaluating some other options beyond svb but uh currently we have a term loan with svb and those are that's kind of your typical rates somewhere between three and six percent 20 to 50 bips of warrant coverage that kind of thing yep yeah right in that line yeah and why would you look at moving away from svb have you found cheaper capital uh we are finding yes we're finding cheaper capital um and i think our story is appealing to some of the banks we're talking to and they're being pretty aggressive and how they're looking at us yeah uh when you analyze the cost of capital is it strictly just looking at can we get cheaper than a three to six percent interest rate uh yeah i mean i think there's you know it's that's part of it but also making sure that we're building a relationship as we think about some inorganic opportunities out there that that we have a potential lender that um you know can support us with that i'm not quite sure i know what that means so um i mean i guess the reason i'm being the reason i'm being curious here is because if you found cut capital that's cheaper than three to six percent i want to know about it because everyone will go to no no no no so i mean on the term loan um you know they're all kind of in and around the same spot okay but we're uh you know we are looking at some acquisition opportunities and and would like to finance that in part with debt and we want to make sure we have a banking partner that's you know kind of you know at our at our side on those opportunities okay so let's do that if you were going to raise capital to help to help essentially put up some debt in an acquisition where you maybe only have to put let's say you're going to buy a company for 5 million bucks you only have to put up a million you use debt to put up 4 million what facility would you do that under would it you said an a you you do it under kind of an ar advance versus something else uh no i think i think we would um i mean so we have the equity coming in and we'd probably bounce out with additional uh term loan okay have you found so very rarely will svb or basically these debts if you're getting a three to six percent interest rate because these banks are making so little they always are going to be want to be senior position it's very hard to stack term loans without doing a refi so is that what you're looking to do is actually a refi does something give you a bigger term loan than svp yes oh i see so you're not looking to get someone to sub svb you're looking to refi and get a bigger line absolutely sorry i see got it okay very good very good well we'll look for that news that'll be exciting um on that noah jay let's wrap up here with the famous five number one what is your favorite business book um you know my favorite business book would probably be um uh never eat alone by keith ferrazzi although i'm reading uh right now i'm reading um the founder um which is also a great book very good number two is there a ceo uh of your following or studying yeah so uh timely one with uh john donahoe who just stepped into the nike ceo position yesterday leaving servicenow yep number three what's your favorite online tool for building your company uh you know uh since i'm kind of a market-facing leader i would probably have to say hubspot so i i look into the app every day to see our sales team is doing and building pipeline and and uh driving activity with prospects jay number four how many hours i spend every night uh target seven but uh not often hitting it so i'm about six and a half okay you mentioned a wife earlier so it sounds like married how many kids yeah married uh two boys two boys and how old are you i'm 52. 52. last question what do you wish your 20 year old self knew yeah so it's a that's a good one because my oldest boy is 16 so he's approaching that age pretty fast i think uh probably three things probably one find a great mentor two don't be afraid to join a large company early on they can provide great opportunities to learn and develop and the last one i'd say manage your cost structure if you want to take the leap start a company be an entrepreneur it is really hard to peel back costs after they've kind of you know crept into your life guys revellier is helping folks like anthem get more information on the clients and patients that they ensure they're doing that again via jay's tool he stepped in in 2016 after the company had already raised about 8 million bucks today raised about 18 million looking to raise another 10 uh right about now to fund some acquisitions and do some other things they're burning about a hundred thousand dollars per month right now 80 people on the team 15 engineers two quota carrying sales reps really impressive economics here 10 gross revenue turn annually 150 you heard the right 150 expansion uh revenue so call it 240 net revenue retention payback period only three months so healthy economics again 30 customers paying about 300 000 per year we're about 8 million in arr is pure arr and another 2 million professional services on top of that jay thanks for taking us to the top yeah hey nathan this was great thanks for your time do 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 points from the world's leading sas ceos click and watch one of them right now