How Aloha (formerly Review Wave) CEO Matt Prados grew to $20M revenue and 5.9K customers in 2024.

please help me in giving Matt Kratos from our V wave a warm Round of Applause [Applause] welcome Mike welcome welcome this will be your mic we'll grab a seat for you get up here get you featured all right so um talk first guys who knows about review wave have you used the product you've seen the product you've heard about it okay how would you describe review wave you know this guy uh new customer all right I just there we go perfect our product is definitely not for the SAS Market it's for doctors so um so tell us more about that yeah what's the product do review wave doctors sure so uh about six years ago I was running a digital marketing agency and did an analysis of all our clients who was getting the most new patients and I found who had the most reviews got the most new patients because we was in the same website the same ads all this kind of stuff and so it literally started as a little side hustle let's just show them how to get reviews coaching didn't work everything we went into technology it was manual that kind of worked but then we automated it by connecting to the electronic health records that they already used which you've heard that strategy over the last couple days integrating into their stack it was magic we just automatically started asking the reviews the reviews came in they got more new patients and you know that was the kind of the aha moment we're on to something we've certainly grown Way Beyond just asking for reviews we're in a complete patient engagement engine online scheduling appointment reminders automated campaigns you know it's it's a beast now vertical integration is beautiful now everyone wants to I don't know about you guys but some people my age um us Millennials they wake up on their bed and the first thing they look at a Snapchat on their phone or Instagram me it's the stripe dashboard it's always the stripe dashboard it's did I sell while I was sleeping and then I have a good day if you sell everyone wants to wake up and see this on their stripe dashboard so what are we looking at right here what is 25.53 in Gross volume look like yeah so I mean as you can see it's not the hockey stick yet we're still in the small you know upward tick but it's doing the the hard things over and over again consistently growing we've doubled year over year every year for the first five years and you know that's what it looks like and it uh got us to you know these different graphs I'm not a big graph guy I'm actually in um PowerPoint jail right now Nathan had to walk me through because I don't do decks yeah I'm like man you have such a good story but this deck is just not gonna work just let me do a deck and let me just interview you and he was game you're letting us do it so that's good so I mean I'm just I'm an operator I don't go around I don't speak on stages you know literally Nathan asked me to speak and I was like no I'm I'm actually not going to come I just archived that email I was like I got too much going on I went home that night and then I felt guilty because I've been exactly where you guys are in these seats and needing to hear one or two nuggets that will allow you to go home and do something that'll change your business so uh I guilted myself into coming uh had no time to be here literally was he was trying to get me to do this deck while I was on my 25-year wedding anniversary in Laguna Beach and I was like really bad now that looks so bad now okay but okay so let's type into that guilt right what are those things where like man I really gotta tell these Founders these couple things about our early days yeah so I mean there's so many lessons that you learn from different stages right uh you know in the beginning you know when you're just trying to you know make any kind of money from you know like zero to 100 clients uh you have to just be on top of everything right um that we've come to learn was wartime like that was the wartime CEO in me where it's like you know you're screaming it to get stuff done like you're breaking everything like systems don't matter at that point just getting result matters and then you know you evolve into you know having more people and and then you have to have systems and Training Systems um you know I think one of the biggest realizations you know in the last year that I've had is whoever starts with you is typically not going to finish with you and that's something that most people don't talk about and they don't tell you so you're not emotionally prepared for that when it happens uh so if you have people that you're really close with that have started this company they've been with you for a while you know life changes and sometimes they leave and so wait Matt let's dive deep there for a second so all of you guys think about your original cap tables from however many years ago the original Founders just raise your hand if you had some sort of well it's not dramatic I won't call on you to like throw your old co-founder under the bus because they won't let you buy back their Equity but just raise your hand if you had some old co-founder someone that had Equity where there was some kind of friction raise your hand high this is like come to this is the Oprah moment of SAS right we're all together right so what was your story it's not even just the cap table right it's it's just it's also employees you know uh had a had a gentleman who was with us from very very early on and he was with us for uh over three years and you know had a life change where you know got a girlfriend she was a ways away um he wanted to work remote we said absolutely not we are not remote first we're remote never I hate that business model um but uh you know so then he got mad at us and you know put in his notice like hey I'm gonna leave and we said cool you know you can stay as long as you continue producing and uh he just stopped doing good work right he started slacking on how he handled clients and caused some upsets Matt what's context here how big was the team size when this particular thing happened he started with us when we had like seven people and I mean he got let go this year and were you know over 70 people now seven and was he leading some VP of Revenue some critical it was high up in our support team he was great he was he did great work for while he was here uh I mean literally I had him over at my house every Thanksgiving for three years you know like he was part of the family right but life changed and he had to exit and then I'll tell you what he didn't like us on glass door somebody needs to start a review site for employees I know it's illegal so we can't do it but can you imagine if you got to look at the reviews from employers about employees before you hired them because man the things they say about us that's an amen moment someone's got to start that there's a there's a billion dollar business in here someone's got to just build that and go to town um okay so talk to me before we get into actual doctors pricing packaging things like that what what any co-founders what did your Captiva look like on day one uh I owned 100 you still own 100 no okay so what happened you didn't raise though right it's bootstrap yeah so I mean certain you know key employees and and whatnot um we did have one small like early early you know 150k from uh Angel at that point was a strategic kind of deal but uh we've never spent the money it's been in the bank the whole time uh it did allow us to you know tell people we had money in the bank so made a few hires easier but but no we've uh I'm 100 you know bootstrap guy we've never had a burn rate uh I couldn't sleep at night having a burn rate uh I would just go nuts so that's amazing okay so how were you able to do that if we go back to your Revenue growth here were you pre-selling contracts in 2018 to 2020 like what was the average price point these doctors were paying you per year yeah so we started at 99 a month and I hate annual prepays so we never did them so we literally and we were free trials so first for first 30 days was free and then it was 99 bucks a month on a month-to-month kind of contract and uh We've over the you know six years moved that from a 99 starting point to 299 399 499 and with another 300 available add-ons so we definitely pushed the you know go up Market scenario there I was gonna say so on this screen right now everyone's saying you're spending 1800 bucks to get these doctors as customers but the average initial ACV is it was about what today so I mean you know you've got 35 000 is what our um you know guys calculated but in reality at our growth rate half of our customers came on in the last 18 months so you can't even I mean you can't really get an LTV when they've only been with you for you know one to 18 months because but at the end of the day is our is our attack on there no it's not yeah so you know 0.76 so less than one percent logo term month over month so they're not going anywhere they stay with us what do you guys care about more when you guys run your monthly financials do you care more about a really healthy LTV to CAC Ratio or a very fast payback period if you care more about payback period raise your hand a quick payback period Instant Cash payback raise your hand okay and then hands down so as everyone else on the other side other side yeah I mean the tricky thing I see is you see folks that do what probably your CFO did for this deck which is take your monthly churn do one divided by monthly churn they get a number of months of LTV and then multiply by your RP which is how you get 35 000 LTV the problem is if it takes you 24 months to get the money back you have to raise Capital to do that how do you cover the burn so how do you get your money back so fast yeah so I mean we are uh 18 profit rates right now so we've got plenty of money to scale certainly as we find new channels and do different things and if we start to lose that you know profit margin then you know we would have to raise but we we have not to date had to raise it so just to be clear you just broke recently a million dollars in monthly revenue and mrr and so you're talking about 180 Grand a month to the bottom line and so as a Founder that's generating cash flow how do you personally think about that in terms like wealth management do you put it back in the business do you diversify into real estate crypto God forbid anything else I mean I gambled a little bit in crypto that would go well but uh but I mean yeah real estate um you know different funds that have preferred returns and and things like this try to be on the safe side on that but I look at my business as what will create my total wealth and then any of the Investments is more of just like keep it keep it safe keep it protected over there but you know take take some off the table I still invest in the business so you know it's I could take a lot more if I tried so the what your guys are looking at now is actually the slide deck that Matt said he sort of put together um and I didn't dig deeper in asking Matt via email well what's a slide deck for but it looks like you're trying to do something now because you put your sides together in a beautiful story so what's happening now are you looking to raise so we're toying with the idea so uh depending on where you guys are at I mean you probably get hit with all the emails hey you know would it be helpful if we met you know even if you're not looking to raise you know the typical there's there's one guy who trains all these guys how to set how to send an email uh because it's the same template but um it's like right when you hit 200k a month there's some API they have in the stripe that just tells them start sending those emails to that guy right um but no so I I actually started taking those calls just to see what's what right I did I didn't go to school for any Financial stuff I walked out of college after six weeks I'm a sales and marketing guy I've never been in the VC world I've never played there so once we started to get success I was like well what are these guys about what are they going to talk about you know what are they going to look at and so I actually used them uh three times in the last three and a half years to dissect our business and tell me what's wrong with it right uh they're all going to be you know like oh your business is so great right up until the point where you're like give me money and then they want to tell you what everything's wrong with your business and so you want to get to a term sheet you don't want to just have the nice talks because that's where they're like buttering you up right that's the the pre-tender date or whatever not the like let's go home part of Tinder uh they're they're drastically changed so get to the point where the address really changed because all of us as Founders have inflated ideas of what our businesses are worth thanks to qualtrics selling for like 22 times revenue and whatnot right so everybody's like oh this is guaranteed 10 well not in today's market like the economy right now everybody's puckering up it's like seven times revenue is is where they want to kind of max out at right so you got to know and you got to know what they're not going to like about you and start to understand I mean if you only dated once and got married did you marry the right person I don't know like you get out there and meet some people right so that was kind of my theory on taking these calls and I didn't design this deck I paid somebody to do it it looks great it looks great yeah so I mean this is an important part of any deck whether you're raising debt or Equity as the slide that you're looking at right here which isn't what positions you guys beautifully because about Capital efficiency you've been so um I mean have you put this into practice have you been on calls and presented this yet and what's the response been like yeah so we sent this out uh the beginning of Summer which uh no take the note don't ever try to raise during summer it was on vacation nobody wants to like make meetings and stuff so it's very hard to get VC firms to do anything during that time but yeah no we sent it out to everybody who basically reached out ever to us to just get some feedback see what the deal was uh that was you know probably 40 different firms from that we ended up in 30 different uh conversations and uh from that we got down to like three um based term sheets and uh you know and then we actually signed one and started letting them do diligence to see you know what would happen and um I ended up kind of like not liking them kind of pulling back a bit like them or the terms them so personally yeah yeah I mean at the end of the day there's lots of money out there but it's like who's giving you the money and what else are they giving you besides money and uh funny enough they gave me some references of people they did deals with and so I called them and one of them was like dude just so you know they're only money I was like wow this is their reference that wasn't very good for them but uh so you know if I'm gonna you know bring somebody on and they're gonna get to take this ride from 10 to 50 million with us over the next couple years I want somebody who's going to contribute more than just the money because I you know I don't need the money right now and you also have great leverage to talk about what you're asking for here uh no maybe you're not asking for it sounds like it with Drew but what were you asking for yeah so I mean we were looking at you know pretty much 150 million valuation 20 deal uh 50 for secondary which is where you take it off the table and then 50 to leave on the books so we were going to take that 15 million we've got a short list of some companies that we want to acquire to go into other verticals and uh you know as a go to market strategy and other verticals does anyone have any questions on that just the structure of the ask I mean I again I don't mind when founders go raise Equity if there's a massive secondary component because then you're getting rich right that's fantastic you have to wait for you know an IPO to you know build wealth does anyone have questions on the ask and how he structured the deal just yell yell it out I don't yeah Chris Chris person yeah go ahead um it's a great question so repeat it real quick uh so at what point does it make sense to take money off the table at the end of the day uh it's a personal question you know how much are you get you know giving up how much you're getting now you know there's some de-risking factors but at the end of the day if I wait two years you know instead of this valuation if you know we get to you know 5x from where we are what did I lose by taking it now you know I'm not going to make that up in an investment right so it's a it's a hard personal choice you know I mean you've heard a lot of different things over the last two days about how people did things and there's no one answer that's right for anybody right somebody was like bootstrapping is is trying to break even at the end of every year and like I don't believe in that like give me my money I want some money now so I take chips off the table every single month right I take distributions um while growing the business at a very rapid Pace et cetera but uh you know so it's it's all personal choice and uh um I mean we talk about distributions again you said earlier 18 right so you're effectively taking distributions for anything you don't want to leave in the business at the end of the month yep yep yeah so um and then I mean I'll add on to this on the secondary stuff uh a lot of VCS like if this is your this would be your first round right yeah so but like let's say you do a small round um they will always look at the prior term sheet so if you've already set precedence that you did a small secondary already it's way easier to get a bigger one the next time so like I would argue as soon as you can ask Force even if you're only raising a million bucks just get 100 kfs create the pattern in your legal history and your legal docs that you're going to ask for that it makes it easier in the future uh this is some something that I've seen so so we'll see now to these guys that you really like to agree to these terms before you pulled out from for personal reasons uh we didn't quite get the full you know 150 ask but the rest of the terms yes okay Andre did you have a question uh same question so if someone's at 2 million in ARR growing 70 year over year could they get a secondary done 2 million it depends how much you want to take off the table so what we found is because we were only willing to do like a 20 deal they weren't getting as much skin in the game they didn't really like they don't love the secondary amount even though they all stay on their website they love giving you liquidity they don't they want you to be you know tied to the game and you know not go off and be distracted so um it depends and you probably get more favorable secondary if you do more than 20 that was probably one of the hardest parts of our ask is where you know they had a lot of problem with that I do think I want to touch on one thing here because I don't know where else you would get this if it wasn't here um did you get into tax consequences of the secondary and how to process it and if so you know how did you think about doing that if you did close it so let me give you two options pay a lot of taxes yeah well so would you oh so two two big options right did you decide to go the route of having that 15 million go into the company first and the company repurchasing your shares or was it the investor buying your shares directly and then your which you have common and then and then they Auto convert the common the preferred in this round yeah the latter the latter yeah that's what most do but it's a little harder to negotiate uh why did you decide on the latter versus the company buy back route uh I actually didn't even look at the company by background you know I just again I don't play in the in the Venture world so I'm I look at things what's the simplest thing like I have shares you're gonna buy them I'm going to take the money and that was just kind of the thing nobody brought it up so is it is there some tax advantage to that strategy uh how many people are in the US U.S headquarters yeah so um and now the name is going to totally Escape me what's the program where it's 10 million bucks it's sheltered there you go uh if you do a secondary so what qsbs is if you hold your shares your SQL your shares more than five years and then you sell for 10 million bucks effectively you can shelter that 10 million bucks as the founder however if you do a secondary above a certain amount and take money off the table it can kill your USPS qsps eligibility so you want to make sure if you do do a secondary before five years you don't screw up your qsps eligibility because when you do sell for whatever you end up selling for one day you know a billion dollars if you have kids and set up trust you can actually use the qsps 10 million not just one time for your own but trust for your kid your wife and I've seen people do this with 60 70 million bucks so you don't want to lose that tax shelter yeah so I tried to start looking at like how do I do all this tax planning stuff and what I found is it consumed more of my head in time where I couldn't run the business the way I wanted and finally I was just like screw it I'll just pay the taxes because I'm going to grow the business so much bigger faster that it's just not worth screwing around that's probably the right approach I just don't like riding a 5 million dollar check to the government you know um cool let's talk about one last thing because I think this is pretty freaking cool your co-founder is your wife and it's working you've been together for 25 years what's working the appropriate stuff you can talk about uh you know business marriage whatever there's going to be ups there's going to be downs and you've got to be able to you know take the good with the bad you gotta keep pushing through um and uh you know admire when things don't go your way and figure out how to make them go your way that's the ultimate question is does Kirsten own 51 or do you on 51 technically it's in my name but in California in marriage all that like it's it's very very cool okay so let's go now now in terms of the background here too were you both doctors first software second or one of you software first uh neither of us are doctors okay I walked out of college after six weeks never went back she never went to college uh we have no degrees uh we have no you know reason to be in the position we are in and we just did it because I don't give a about the rules I love that all right let's wrap up here with two things one what you're reading and then where you're giving back because this is important to you in our email exchange so let's talk about books first yeah so you know I mean I've spent probably a quarter million dollars in the last uh 10 years on my educations I didn't go to college college but you know I joined you know masterminds uh you know everything from Dan Kennedy to Frank Kern to Dan Martell you know um all great experiences but it's amazing at what you can get our books so you know every single every single founder should be reading you know a book uh to four books every single month right uh you know what you do is who you are was absolutely amazing if you haven't read that uh never lose a customer again we actually give that book to every single one of our customers because what we do is based on never lose a customer and having good patient experience those kind of things uh every single one of our customer support people read that book as the second book that they read the first book they read is how to win friends and influence people that's the ultimate book that any team should be you know reading and helps build a culture that you know can like each other over a long period of time important anyone else you want to shine light on or these these are the ones these are the main top ones everything on here is amazing uh you know there's there's so much uh here uh and so much not even here you know I was in Dan Kennedy's Mastermind and he said to me he's like look you can buy everything I've ever written for 219 anything you spend above that is just to be closer to me and I mean I've literally paid you know 20 grand to go to his house for the day you know to be close to him and have those conversations and stuff um but it isn't there's so much in those books and and I wouldn't be where I am today without them Andre fire one question and we'll wrap up with donations here so we actually pay them uh 15 minutes a day to read and encourage them to read more and yeah so it's all over the board you know they'll go through periods of doing it and then they'll go through periods and not doing it and then you know at our you know kind of monthly Town Halls I'll read excerpts of them and I'll talk about you know different things to try and encourage them to read but not all of them read and not all of them stay nice I wonder if there's a correlation between them all right Matt take us home here some of these organizations are very close to your heart tell us why yeah so I mean donations tips uh all these things you know I feel like as important as you get to any kind of successful level to keep the economy going and and help people who you know maybe can't help themselves and so there's a ton of different things that we've done uh operation Underground Railroad uh they help with human trafficking victims uh negu is actually local in Orange County provides Joy jars which are basically jars of toys to kids battling cancer we even took our entire team over their headquarters and packed jars over there had a great team building event there uh but you know any you know I mean well I was born on Camp Pendleton both my parents were Marines so The The Uso deal you know we got 20 soldiers that were deployed to be able to record a bedtime story for the kids back home you know so just you know there's people doing things to create the environment that give us the life that we have and what we can do as Founders and I feel like it's very important to give back and uh you know not only in these donation things but like tipping you know um you'll find the more you invest in the people that you see on a day-to-day basis you I talk about it as putting deposits in your staff or deposits just in people that are going to be around you uh you know we want we go to the sushi place all the time and I can see the waiter which is having a bad day one day and I mean our bill was like 60 bucks it wasn't much but I tipped him 100 bucks um and the next time we came back which was like two months later it was a long time he came running from the other Corner over like hugging my wife he thought she did it not me but like you know he was so excited to see us back and now literally every time we go there he's like whipping the staff like hey make sure they sit right away Hey where's their food why isn't it on time like it'll change the way that people interact with you so invest in as many people in your life as you can and they'll invest back guys on that note talk about a well-rounded founder guys give it up for Matt Alfredo is that review wave [Applause] [Music]