Route the Services platform Revenue, Valuation & Funding (2024)

hello everyone my guest today is ricardo regalado he's a passionate entrepreneur who's driven by commer by empowering the commercial cleaning industry his purpose is to motivate inspire his peers family and colleagues with positivity shares genius he is ricky the cleaner and he's focused on building right now a company called get getroute.com helping folks it's really a multi-vendor marketplace focusing on the vendors ricardo you ready to take us to the top that's it let's do it okay so super niche space which by the way i love but for people that are not familiar with this cleaning space tell us exactly what space you're playing in yeah so you know when you think of cleaning there's two sides to it uh there's a residential side which everybody thinks you know come to my house clean be a housekeeper uh but the space i'm really focusing on is commercial cleaning so think of you're at the office you're at a restaurant you're at a health care hospital those folks that are cleaning the space uh nine times out of ten are outsourced and they're being uh the services are being done by a vendor and so are you a marketplace to connect the two are you selling service or software to the cleaners yes so we we are today a sas product right so we're b2b so we are a product that is sales tools for the commercial cleaning vendor uh but by doing that we've gotten some great engagement where it's like hey let's take it a step further where we could be a suite of tools and then add to that to that offering because uh people people need it people want it there's not no one-stop shop software uh right now in our space so nathan's cleaning services i do 20 office building in atlanta every single month i might use you to manage cleaning schedules of those 20 office buildings so uh yes and no so think of this think of nathan's cleaning service is looking for work nathan's cleaning service is getting receiving leads from google somebody's found you right where we come in is we from that step forward is we we are a walk-through tool we're arriving on site and we've digitized the pen and paper process so instead of capturing notes and taking photos with your camera phone and then all that being done again in the office you have an app now that we we capture the photos you take the square feet measurements you write all the hot points and it's in the app itself and then at the office if you wanted to that gets pushed through the web so anybody in the office could actually work on the bid that you just did a walkthrough for uh in chicago and you could be in philadelphia so just be clear you don't have employees all around the world but i can upload my photos when i'm walking through atlanta of the office building to your application to store them and organize them correct you got it i see so and that's the first step nathan so that's the walkthrough in our in our industry the walkthrough is the foundation of everything then you get to bidding and estimating calculating your price point and then you get to the proposal you know and every step all that data is getting pushed and so why are you better than ex i imagine people use like probably excel for this like why are you better than excel yeah so excel is is great to come up with that price right they've got the pivot tables the formulas but what we've done is we've digitized that walkthrough because what people have done is they've taken those notes and try go back to the office upload it on excel and then calculate right where us capturing the photos in the square footage and taking those notes now what a client calls back for carpet cleaning when a client calls back for window washing when they call back for adding three days of service those photos are always there as a portrait of the space so what do people pay you for this so we got two products right now it's a 50 a month starter plan and then 130 a month growth plan for those of the because the industry's fragmented 90 is operating at under a million in revenue the rest are the big boys right abm aramark sodexo uh where we're not focused on those we're focused on the small mom-and-pop shops to help really just drive the economy raise the threshold and the bottom line pricing because that's what we're solving is uh how do you say just improving the way it's priced because that is what's wrong with our industry is under bidding and how many of these mom and pop sort of cleaning services pay for your services today pay for your software today yeah so we launched about 12 months ago we got 250 companies uh we have companies in canada we have companies in australia south south africa using the product and that's what's exciting is it's a global solution the way you do a walk through here and bid and do a proposal is the same way you do it across across the world so can i take 250 times 50 bucks a month you're doing about 13 000 a month right now in revenue we're almost there uh paying paying customers it's about 212 215 right now yeah so we do free trial right now you get a 30 day free trial and we try to convert those into you know paying customers but that's why now the marketplace sounds so great because you know supply ordering um the ability to order supplies right the ability to order a work use a workforce management tool where we don't do time in attendance uh we don't do quality control but companies need that so it's like we built a great program that can really integrate with anybody let's bring those all together and really give these small business owners the power of data and technology so launched in 2020 you know 212 customers 50 bucks a month about 10 500 a month in revenue scaling from there have you bootstrapped or raised bootstrapped i love that got one angel investor how much did they put in yeah well actually two i'm sorry one just just put another 25k so i have two at 25k okay eddie lou eddie lou here in chicago and chris deutsch here in chicago okay so 50 grand and how much equity do you give them oh it's a safe note so so so we had a safe note going right now um it's eddie's got a little bit more he's been an advisor and he's pretty much been with me since since we started kind of guiding me through the through the waters of vc and fundraising because man i i never raised money before i i own the cleaning business and i i've grown that to a 10 million revenue business and i never asked for money there right but with technology now i see why people raise but then i see how people get down the rabbit hole of raising too because it's almost like a necessity but we've we've got to the point where we know the investors that we want to team up with um and and i appreciated of that you know because it's is it safe is it safe capped or is it uncapped it's kept would you cap it out of curiosity yeah no we kept it at 4 million and how did you go for that number we we had a we had our first attempt at fundraising uh and we went the vc round right nathan something i learned too early right like that was pre-revenue we should have gone that route but it helped me open the doors to speak to a lot of people where now they're keeping in touch now when we go back and we've gotten to the mri that chicago midwest wants you to be at uh it's gonna be an easier conversation mm-hmm you built a cleaning when did you launch your cleaning company not the sauce seven years ago and you grew it from nothing to 10 million a year in revenue in 2020 yeah yeah i mean is that profitable how much do you make on 10 million yeah i mean it's it's very profitable it's what it's how i funded the route the the software how much have you put into the software we average about eight to twelve percent net margins right now yeah is that her gross is more about you know 30 34 but it's very competitive so that depends on if it's a multi-site location if it's a one-off location so those can vary how much from your cleaning business cash-wise did you pump into the software product to build it out so we put about seven hundred thousand in that's how much i bootstrapped okay and are you full owner of the cleaning company the cleaning company is my wife and my cousin and i uh so it's family business that's why i'm able to focus on route today is dude i got when i say family i've got 17 family members between my wife's side and my side and they're they're killing it though they they rot they're rocking it out they're letting me focus on the software product because they see that as as the vision uh or it's just just the potential of what this all could turn into and it all came from cleaning man well and so why not go build the largest cleaning company in the world use your cash flow to buy their competitors monopolize the market price control versus saying you know what let's get going on the software thing let's put in 700 can build it i get i get that question a lot nathan because it's like rick you're you know because we're already you know in our space we're we're already in the top you know five top three percent because again not many companies reach this this level what is the url of your cleaning company it's uh rosellato r-o-z-a-l-a-d-o dot com rosellato.com that's my cousin's that same and my last name together so it's i mean i in in one short answer nathan i'd say i i've i've gotten lucky with this company and it's been lucrative for me and i'm just a big big person i've given back my father my late father he was my first ambassador first employee first everything he's like rick you got something just share it with everybody man he's like i didn't get when he came over here from mexico you know he didn't go to school he went to kindergarten that's it came over here with no shoes at 15. he was like this is awesome you know like share this with other people man especially minorities too because we're always the ones that are doing the cleaning and doing the work he's like it's aw it's cool that you're because he thought i was crazy building tech he's like you're absolutely nuts you're you know what what what is a mexican do in building technology when you have a cleaning company but it was it was that that drove me and his smile on his face that he said whatever somebody said it's too risky or why are you doing that just do it because why because i'm empowering this space and if i can help these small business owners start to creep up on 250k revenue 500k revenue million dollars in revenue they deserve that because the bigger companies take all of the pie and when it gets down to the smaller businesses it's why they start and fail because they don't have the capital they don't have the cash flow they don't know how to bid correctly and they just don't have the tools to succeed man you're eating you're eating your own dog food rosalatocleaning.com 307 employees you're operating in 10 states you've cleaned for 539 clients 145 currently 40 000 shifts a year i mean this is a it's a large business oh yeah it's it's a fun business too man the office looks like it's like a mini google cleaning office here man it's fun so let me ask you a question um how did you get your first hundred customers yeah uh organic man i mean no come on ricardo nothing you do i can tell from your hustle nothing you do is organic you made it happen what i made i i mean we we've so we i got a podcast called cleaning the cocktails uh we go to convention shows i i do a lot of sharing man i i give value back and i ask for nothing in return so i think it's built some credibility to a lot of the cleaning industry where we have like three facebook groups it's it's surprising that social media has worked for us it was a surprise but now i see why because what's the name of the facebook what's the name of the facebook one of the facebook groups so we got commercial cleaning mastermind group yep and then we got route cleaning uh cleaning quoting and bidding estimates or something like that oh that's awesome i would never guess that there would be a facebook group for commercial cleaning but i guess that's 20 000. we got 20 000 members 20. club i just had a room uh 70 people was in we're in the room all cleaning professionals that had never heard of route besides like the big guys how many commercial cleaning mom and pop shops are there in the united states yeah so quick stance uh there's about 930 000 companies in the u.s there is 30 000 of them are those big boys there is 610 000 that are commercial cleaning that have about three to four hundred thousand is that residential space and when you think of those residential two it's 1099s literally one or two people you know where they still need tools so if anything if you can get sales you can grow your business and then i know those other ceos of this of the workforce management solutions in our space that they love that we're trying to get them there because it's it's overwhelming if you're i was there if you're the you know sales guy you're doing the cleaning you're training you're inspecting the accounts you're running marketing automation you're buying supplies payroll accounting dude it's it's a lot i mean 32 000 new cleaning companies hit the market 50 of them fail talk to me about how you're building this on the software side of the business what's the team size today how many folks yeah so i got a co-founder joe grotto who's my my chief product officer like chief marketing officer this kid wears a lot of heads self-taught coder um he's just about he's my right hand with technology he's just a smart smart dude man uh i've got greg berg who is my head of customer success like slash chief experience right the titles don't really mean much how many people are total it's five oh you got five of you guys okay and did you split with your co-founder 50 50 or what no so i took on i took on the brunt of it but he's got some equity as well and we're actually going to be giving equity to some of the other founding team members because dude they've stuck with me man i mean none of them are getting paid what they're supposed to get paid at all um and they've written they've been riding this way for the last year and a half and one so one engineer your co-founder uh no so two engineers there's one full stack engineer and then my co-founder is an engineer as well uh and then i've got a front-end developer and then we've got a designer uh okay he's self-taught though right so he's still learning learning how to be a ux ui guy got it right and then we have biz dev and then one biz dev so does dev guy carry a quota or no no right now not really he's more he's my he's my other side of just sharing value adding content because he does sales for me on rosalato so it's like he knows the space he's walking in their shoes so that's where he brings value for our customers yep and talking about churn what's your monthly churn look like yes we're the last time we checked it goes up and down it's eight to twelve percent is our turn but we know why why it's our it's 1.0 version right now right we're we're just a sales tool today that's why we want to add multiple features to become more sticky because we're a luxury we know it we're a luxury item today why are you a luxury item if every home cleaning service needs to do quoting and bidding and store photos etc well i so i might so i don't i take that back nathan but tell me what you think of this is we're we're a great tool to improve their pricing but if they don't win the proposal because we can't we don't guarantee that you're going to win the proposal with our bidding right it's not like it's proprietary or a secret sauce it's just streamlining and improving the efficiencies but our goal is taking it from the proposal to then taking it to the next step of billing right because now it's important now invoicing becomes a key indicator to success of that contract in that bid because what we've seen obviously the there's some little you know gaps in the in the application it was our first shot at building it right where they've told us the feedback has come rick give us a little bit of lighter crm there's no real there's no real client location system within the platform um it's it's fast it's quick but it's a it's there's a step where it's a little in our section area by area so i'm dummying it down a little bit i understand in the case of it's we're going to make it a camera app man it's going to be universal or at one point i'm going to send this to nathan you're my client because of covid contactless you don't want vendors in your space here's the route app you do the walkthrough for me i understand so what's the are you spending any money to get these customers what's your cac oh man it's i mean we're our cac right now is about 3 315 320. 320 yeah okay so 320 bucks to get that 50 a month customer so you're talking like a six seven month payback sort of time frame yeah where are you spending that money uh i mean right now that was our cac really probably a few months ago because we did some test runs nathan we really have not been spending much money i mean we're we're depending right now on the social media approach is what's gaining so what are you ready what are you doing in the facebook what are you doing on the facebook well two quick questions we're almost at the time how many podcast downloads is each episode get in the first week that it's live so we get probably about six to eight hundred downloads yeah and it doesn't really matter how much as long as there are 800 people that are potential customers right so it's targeted what do you do every single user is a user on that what do you do what do you do in the facebook group to keep people engaged is it just a constant posting schedule or what yeah constant posting schedule i do do videos of the features of using it in real time using it in real life they get they get uh we get good engagement when we do that and then we've had an ebook campaign going right now we're on number three uh we're guaranteeing 24 e-books throughout the year and we're taking them from the walk-through literally to staffing hiring using a little bit of my rosalato experience to give these you know users to know like hey we're not just talking sales here man we're gonna give you value across what's the ebook title it's multiple titles like the one that we just did uh last week was the five steps the the five areas in how to look for a contract the first one was the eight steps of performing a walkthrough to sale a lot of content we love it on that note ricardo let's wrap up with the famous five what's your favorite book my favorite book dude man i just two books i just read crushing it i had covid uh two weeks ago so i had ten days a quarter man i'm glad you're healthy now i read i read crushing it and i read traction about the new eos system number two is there a ceo you're following or studying well i do i'm following garyvee man i really am people people want me to be the guarantee of cleaning number three what's your favorite online tool besides your own besides my uh i love slack number four how many hours of sleep to get every night three and you know ricardo that's not healthy come on i got a three i got a three month old right now that's crazy you would die if you only slept three hours a night no yeah usually about five to six it's good for you i see okay or three month old and do you ha is that your only kid or do you have more i got a two and a half year old too okay so married and two kids married and two kids and how old are you 38. last question what's something you wish you knew when you were 20. uh entrepreneurship man i wish i knew more about entrepreneurship guys there you have it built his own cleaning service started eight seven years ago up to ten million dollars in revenue now said you know what let me build software to help myself he's also convinced 212 other cleaners to sign up for his product at 50 bucks a month they just passed 10 000 a month in revenue he has put personally 700 grand in the company from his cleaning business to build the software another 50k from advisors and investors on a safe excuse me at a four million dollar cap team of five people right now three engineers one sales biz dev guys they look to continue to scale with their podcast facebook group and other community driven channels again creating a unique advantage in the cleaning space here ricardo thanks for taking us to the top thank you nathan appreciate it man one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas 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 for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this 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