How Safety Evolution CEO David Brennan grew to $650K revenue and 155 customers in 2022.

guys safety Evolution broke 54 000 a month just recently up from eighteen thousand dollars a month a year ago a lot of that growth came from acquiring 450 000 bucks of ARR when they bought their smaller competitor called Safety Tech which uh which they gave uh 40 equity in the combined company in order to get that deal done it was a non-cash deal which is great he's proven either you have an Enterprise motion they've got their biggest customer already paying 55 000 bucks per year which is currently about eight percent of their total ARR he's obviously going to look to continue with that motion as they look to break a million dollar run right hey folks my guest today is David Brennan he's an experienced CEO SAS co-founder and safety professional he's driven by a passion for technology he's focused on creating user-centric software that is disrupting the safety industry he's passionate about building and creating High performing teams at safetyevolution.com all right you ready to take us to the top David yeah let's do it all right so so what does this mean safety for who and how is a software so um it's our uh ideal customer profile is oil and gas service and construction contractors so we focus in on that 500 to 1000 employee range and so that gives you a little bit of an idea where we're going but we really um look at safety as a as a function of your business and so we have spent a lot of time digging in to better understand how we can change safety from compliance to an actual tool that that helps your bottom line and protects your Workforce and is proactive in what it does so oiling mainly oil and gas companies uh oil and gas service companies and construction companies interesting what kind of service companies so so what we do is the the uh the differentiation for us and the way we narrow it down is there's a lot of companies that are the prime contractors on a job site and so what we actually do is we provide software for the companies that service them and build their projects so construction companies would be like the Electrical Company the plumbers the the uh form you know companies Carpenters that type of stuff oil and gas would be like Wireline uh Frac companies you know anybody that's servicing the main players in the industry interesting okay so I run a service company that dispatches plumbers to fix toilets in a certain zip code in Austin Texas and one of those plumbers took the thing off the top of the toilet dropped it on his big toe and like broke his toe and is now wanting to like sue me if I had safety Evolution you prevent that or tell me how you fit in so uh that's a great example so think of it this way when we build uh so whenever we have employees we need to make sure there's there's three major things that stop events from happening the first one is that they're um trained that they have experience and that you've verified that they have experience so your safety program does all that plus then it gives the tools uh to the worker and I think this is the big changes like so many times workers would fill out a document because they were doing a Compliance Document just to protect the company and what we're doing is we're moving companies away from that to where the workers filling out that document for them and so that process is really designed for them and and so there's so many constraints with things like uh with with paper and those type of communications that you can't actually see what's happening in the field so I'll give you a little bit of a story on like how this kind of comes into play on a major project if that's cool with you Nathan yeah yeah give us context first though on uh to tell where the average customer is paying per month and then tell us that story okay perfect so right now our our average monthly is about four four hundred dollars so annual contact values yeah we have to talk about that because that's up significant that's up over 2x from 2020 when we last spoke so let's make sure to talk about that that's climbing fast Nathan just so yeah so we pulled some if you want the business side of it there's some really really cool things that we've learned in the last two years of course I want the it's a business show of course I want it okay man well let's give you the let's give you the dirt so yeah so so just for everyone has context was saying okay when when we spoke in 2020 you were doing you had about 43 customers at 170 per month you were doing about a hundred thousand bucks a year in Revenue right yeah oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your 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us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview how did you take those customers are they the same customers paying more or did you fire those customers and just bring on more mid-marker Enterprise accounts so those customers are still there and so they are still significantly uh keeping the average down I'll say um since we last talked uh currently we've got 155 uh companies um we're at about 650 in annual recurring Revenue we purchased one of our competitors safety Tech um rolled them in in June and um did about a 180 degree pivot in our product and went from a very rigid uh system to now that was very designed for those smaller companies that's why the contract value was so low to now we're you know uh putting out proposals and and uh and signing contracts that are anywhere from you know 20 to 60 000 a year David what's your biggest custom what's your biggest customer paid today not contract you have out actually closed customer they paid yours close customer is is 55 000. wow okay got it so you have your biggest customer makes up almost 10 of your total revenue so this is a pattern that you've built technology that does have Enterprise motion you just now need to get more of the fifty five thousand dollar your customers how are you doing that so we have it's been really interesting to see because there was like a lull a covet law where companies were really I think they were just kind of worried about uh taking on new technology and so what we've seen here in the last probably six months is a significant shift in those companies that are we'll say contract value anywhere between 20 and 40 000 a year um they they pretty much make up about eighty percent of our pipeline now and so it's been really really amazing to see I mean we've we've had to go from a demo closed process to now it's full uh Discovery demo proposal and we're selling into a very well we're selling an enterprise process or or flow really and so we're seeing that in the contract value so that's that's where we're seeing the shift and and we're we're really um seeing a big pickup there in that in that uh vertical and if you're doing about fifty four thousand dollars a month today which is a 650 000 a year run rate you just shared with us do you remember what your run rate was exactly one year ago today foreign I think it was about uh 150 180. yeah that's you told me the email 200 so right right on the money right so you you're doing you're doing about 18 000 bucks a month in Revenue exactly one year ago now up to 54 000 so this is significant growth tell me about this acquisition I mean most of my listeners right now who are under a million in AR they're going wait you can acquire a competitor with under a million bucks in Revenue you did it how'd you do it well it's an awesome story I actually this is the power of your network okay I walked into um Dan Martell's SAS Academy and I sat down at my table in October of last year and I did my perfect intro and um the lady across the table stood up and said hey you need to call Ryan querying with safety Tech they're selling he's selling the company and I think it would be a great fit for you I followed up with her a week later and said hey can you get me the introduction and had a couple meetings with Ryan and it just was a perfect fit for us um they had they had experience where we needed it their product was developed where we we wanted to go in certain spots and it was just it was just a match made in heaven and and the funny thing is everyone's like well how did you swing it from a cash standpoint because we were bootstrapped Nathan the whole time we just uh did a share deal with them and so there's no cash involved so you can do anything if you want it so so what percent of the company did you give the safety Tech Team uh 40 okay and and how did you guys value each entity obviously you have to Value each entity to decide how much Equity they'll own when you merge so what this is kind of like I guess the backwards way of doing it Nathan is saying hey um we don't really care about what you think your value is because you're a startup and really there's you know you can play value metrics all you want and unless you have ebitda you don't really have anything that you can truly value off of so we just said we'll give you 40 of safety Evolution and and this is what the deal is what was their what was their mrr when you acquired them uh they were at um 450 000. wow interesting sorry their Ari was 450. yeah yeah yeah well so that's big right so if you're at a 600 000 run rate today and the acquisition you did was 450 right you basically drove so much I mean you drove the majority of your growth over the past 12 months was what we call inorganic growth through this getting this deal done 100 yeah now they had more Revenue than you did how did you get away with giving them just 40 didn't they ask for like 60 70 and they'd say David we have more Revenue than you we have we deserve more the company they could have said that but I think that again this comes down to the opportunity for them was to come in to a really strong team um and they saw the potential and well they they knew what product we have and so there was a lot of there was a lot of incentive for them to join because of that and so it just it made sense there was there's there was a strong co-founder aspect of it that that Ryan was going to be able to have that support um we had the product that our product was quite a bit more comprehensive than theirs and so so there was that side and and they just saw I mean everyone all the way through their shareholders saw that there was so much more upside to joining the company that the valuation of of you know a 400 000 or yeah so more money are you still bootstrapped today uh yes I think we're like safety Evolutions raised like 90k 90k total uh when was that like back in 2016. yeah uh no no we did Wade and I Wade and I like funded it ourselves and then in 2019 we raised a little bit of cash but but it's been pretty much bootstrapped the whole is that on a convertible mode uh that was just uh just shares just just straight cheers any interest in buying out those investors um I I think well I'll tell you this we've the really cool thing is is we study pricing and so we used to go to a monthly pricing model and what we and that of course really was pushing us down the idea that we needed to raise Capital Nathan and so what we realized about um nine months ago looking at some of our competitors pricing is what they were doing is signing companies up on a reduced annualized annual contract and when I saw those numbers I realized that we could get them to sign up on a contracts maybe 7 500 is on the low end and then going up to like David my question was just do you regret my question is do you regret raising the 90k no not at all so if you had the ability to buy out those investors and get the equity back today you wouldn't do it I think I'd rather use the money for for growth at this point yeah interesting the reason this is the number one use case we see at founder path right now is is our folks that raised a little bit going man I want to give those investors 1.5x their money but buy back 20 of My Equity and and we fund it with obviously with debt we're big fans of Dan Martell so um well and I've looked at that Nathan but I think it's one of those things for us it's probably a solid 18 months 24 months away before it's a consideration because I also you got to think I've got 40 on uh the cap table uh we've got multiple VCS on our cap table now because when we bought safety Tech we got these why does that impact your ability to use debt no I just mean like those I would want to buy them all out at some point oh I see I see yeah yeah well I mean now is a great time to do it though because everything is compressed right next year if everything's not compressed again no one's going to want to sell right so the the scrappiest bootstrap Founders today who are sitting on cash reserves or like for you we give you 300 000 bucks of debt against our 650 000 in ARR you could use that 300K and ideally buy back some of those shares but it's complex it's a distraction it's not product building and it doesn't do with your customers so I get it um all that being said you are profitable today right uh right now we're actually a little uh crying a little about 20 grand a month under but where are you getting that money from stuff like where are you getting that uh grants you're getting grants okay interesting and what's team size today how many people uh 11 11. very cool all right David we're out of time here let's wrap up with the famous five number one favorite book favorite book right now five dysfunctions of a team number two is our CEO you're following or studying oh tons of them um I watched Dan a lot yeah he's he's good number three what's your favorite online tool for building safety evolution click up number four how many hours of sleep do you get every night six and a half hey it depends on the night remember and now what's your situation married single kids I have a beautiful girlfriend who um we're gonna have to get her married up here pretty soon that's awesome all right so no kids and how old are you 44 44 last question something you wish you knew when you were 20. I wish I knew that everyone doesn't think the way I think and so I could give him a little bit more room to be who they are as human beings guys safety Evolution broke 54 000 a month just recently at from 18 000 a month a year ago a lot of that growth came from acquiring 450 000 bucks of ARR when they bought their smaller competitor called Safety Tech which uh which they gave uh 40 equity in the combined company in order to get that deal done it was a non-cash deal which is great he's proven either you have an Enterprise motion they've got their biggest customer already paying 55 000 bucks per year which is currently about eight percent of their total AR he's obviously going to look to continue with that motion as they look to break a million dollar run right hopefully David in the next year man we're rooting for you and thanks for taking us to the top thanks Nathan one more thing before you go we have a brand new show every Thursday at 1pm 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 our poo 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 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2PM Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube their 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 nathanlacka.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 episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive I am on these shows but I do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support all right I'll be in the comments see ya