SmartSuite Revenue & Valuation (2024)

[00:00] Founders, what's going on? You guys know I love in person events and they are back. The recording you're about to hear is from our most recent event where we had hundreds of founders come together, share intimate details, templates, KPIs, OKRs about their business, and it was something special, something special. We'd love to meet you in person. If you want to see the next live events we have coming up via our schedule. The link will be down [00:23] below in the description. If you're listening on iTunes, check this out on YouTube, you'll see the links in the description. Or you can just Google Founderpath or Latka next event. We'd love to see you in person. In the meantime though, enjoy this recording. It's a good one. [00:37] >> So we're gonna focus today really based on Nathan's request on on kind of a journey. And let me get this slide, figure this out real quick. Here we go. Kind of a three part story from being an operator, building a company, becoming a leader in the space, selling that company, kind of transitioning to an advisor investor, where I then invested through either directly or through some venture groups in about 400 companies. Set on the boards of [01:03] >> lots of companies. Be honest, got bored with that and wanted to move back into the operator space, kind of with the next journey. Which is a pretty typical story for a lot of founders that are probably in this room that once you're an operator, it's hard not to be an operator. And I also found that I wasn't a great advisor. I was an okay advisor, but I always wanted to actually do the work and the founders [01:23] >> don't like that. They want you to advise, stay out of their business, I wanted to actually get in and do some of the work that was there. So to kind of kick things off, we're going to start with the story of a company called Archer Technologies. Archer was a company that I founded in 2001. I'm going to share just some basics of the company with the products and the revenue to set the stage and then we'll [01:45] >> jump into kind of lessons learned, things that we did right and then things we didn't do so good that I would would have changed that's there. So from a growth perspective, what's interesting about Archer was that we were profitable in the first year of doing business and I'll share with you how we did that in just a minute. It's a very different market back in two thousand two thousand and one. There wasn't a lot of funding [02:07] >> that was available, 9/11 had just happened, things begin to kind of shut down. So we really had to focus on, we were bootstrapped as well through year eight, we really had to focus on customers and revenue and how we could hire employees. And you'll kind of see the growth rate here through the last year when we sold the company we're around 33,000,000 in revenue. [02:31] >> As a company, we focused on [02:37] >> seven core products. I'll share the idea in just a minute. But the overall idea was to help manage security and compliance processes in the same way that a business would manage accounts payable, accounts receivable, HR, those types of processes in organizations. We had seven core solutions that we eventually had in the company. Each of those solutions were priced at $50,000 a pop, an average customer for us was around $400,000 with some add ons that were there. [03:03] >> And I'll tell you the story on how we sold that a minute, is interesting as well. So here's kind of the basics of the story. So my background prior to founding Archer was I had the opportunity to build the global cybersecurity practice at Ernst and Young. And I had the chance to travel the world, we had about 1,500 consultants in that practice. I'd meet with customers to understand how they're managing security in the organization, mainly from [03:30] >> an aspect of things were going online. They had online stores, online banking was coming on and they needed us to help them understand how do we secure those systems so that we can stay online. So the opportunity was for Archer was to take that service that we've been providing at Ernst and Young and turn that back into a product that we could sell and manage as a process and organization. [03:55] >> The challenge that we had was that it hadn't been done before and as a small startup with the big idea, how do you approach people with a new way of thinking about how to manage security in organization, right? At the same time, Archer was bootstrapped from day one. [04:15] >> We didn't take funding until year eight, which I'll share some of that in just a minute from you. So we didn't have a lot of capital. I put in, I think, 750,000 to start the company to kind of get things kicked off. The market focus for the organization started with financial services, moved into telco, moved into healthcare, moved into technology. At the end of the day, I think we had 76 of the Fortune 100 were customers [04:38] >> after like the first six years of the company. So mainly enterprise level accounts, an average customer would have 80 to 100,000 users of our product inside of the organization. Renewal rates were pretty interesting over nine years, 97.6% renewal rate. So we only lost three customers in nine years, two of those customers were because of acquisitions by another customer that had them, one of those was Lehman Brothers that went out of business that was there. So we [05:06] >> found that things were very sticky that was there. We sold the product as a SaaS offering but SaaS wasn't really around in 2001. So we approached EDS which was our first customer with an idea and said, hey, we can come in and solve this problem for you. We're going to treat it as a process and oh by the way, you're going to pay us the same amount of money every year. And they said, how much money [05:33] >> is that? And I said, $800,000 and [05:37] >> they came back and said, we'll pay you $1,100,000 and I'll share why they said that in just a minute. So they became our very first customer before we ever wrote a line of code. So I went to EDS with a little three and a half inch diskette for those of you that remember diskettes. Had an HTML version that basically was a PowerPoint that showed all the different screens and how things would look. And at the end [05:58] >> of that presentation, they stood up and said, we need your product. How soon could you have it developed if we move forward with you? And I'm like, oh my god, like I don't have a developer. We haven't written a line of code. So I just shared it with them. Was just up front and said, hey, here's where we're at. It's an idea. I've got everything documented. We need to go build that's there. And I'll share a [06:17] >> little bit more in just a minute about that. [06:21] >> The next thing that we did, I told you in year eight, we raised capital for the first time in the organization. Not because we needed cash. You saw from the prior screen that we had a pretty good cash flow in the business. It allowed me to take some money off the table as a founder. And it really opened up to stop thinking about money every day. Every day I would come in the office and the first [06:42] >> thing I would look at is the bank balance just to make sure that we were in a good position to pay everybody that was on the team. But freed me from that and it allowed us to really grow the business in the last nine months to twelve months after that investment from Bain. And if you go out into one of my breakout sessions after this, I'm happy to share more information about what was so valuable with [07:03] >> the Bain relationship that we had. [07:07] >> And then what happened after the Bain investment was that in year Bain came in in year eight and about seven months later we were started getting approached by outside organizations about partnerships acquisition. We weren't planning on selling the company at that time, but it just happened pretty quick. So we went from Bain came in and invested, I think it was a $70,000,000 pre. It allowed me to take some money off the table. They bought about 20% [07:36] >> of the company. They allowed the employees to cash out a portion of their stock options at that time. So it was a good event for everybody. Looking back, it wasn't a great event because then we sold the company for $200,000,000 nine months later that was in there. I wish the employees would have hung on to those options, some of them. [07:58] >> So as Nathan was saying, when we found out that we needed to start a process and people were looking at us, Bain Capital came in and said look, we need to hire an investment banker. We need to create a deck. We really need to go after this to make sure that we get the best price for the company. You have an offer in hand but minute that they know you have a deck, an investment banker, and [08:21] >> that you hire the best of the best, they're not going to re trade that value with you. It's only going to go up from that point forward. So it allowed us to send this deck out, not to the world, we were pretty selective. I think we sent it out to about seven organizations that we thought would have interest back in this space. Three of them responded. Only one of them was super serious and that was EMC [08:45] >> and they wanted to do the deal in four weeks, in one month, which was unheard of. EMC, I don't know if you EMC is eventually sold to Dell a couple of years ago, but they had 43,000 employees. I don't remember their revenue, but we were their fifty first acquisition. So they were a company that grew by acquisition. They had a team of 40 people on the acquisition team that's all they did was go from company to [09:11] >> company analyzing and then onboarding companies that were acquired by the organization. So this deck, this memorandum that we put together allowed us to get an offer for 187,000,000 but what was key when we got to the LOI here is that we also got to keep the cash that was in the business. So the deal was really north of 200,000,000 because of that simple item. And the way we got to that point and it's key for a [09:43] >> lot of founders that I work with is understand how much working capital the business needs, make sure that that is communicated in the memorandum so that you can negotiate through the LOI with hey, here's what I need. And in this particular case, the business generated enough free cash flow each month to more than pay for the business needs. So it allowed us to sweep about 15,000,000 additional money out of the company. [10:12] >> So let's focus on here's what we did right. This is what I wanted to spend most of the time talking about. And I'm getting old, and it's hard to actually read the monitor in front of me with the items. But the first thing that we did right at Archer was we listened to the customer. And what that really meant was [10:34] >> the first year and a half of the business, I spent my time not in the office. I was at customer sites. I was at EDS watching them and learning how they would use a product like this inside of an organization of 80,000 people. I thought I was a pretty big deal, CEO of a company. They put me in a phone closet. That's where I sat. [10:58] >> All the tech was in there. I had my little chair and my desk, and I couldn't even do meetings in there. I had to walk out to meet with everybody. But I just sat there and watched and listened to how they would use it. I was on the phone back to our development team saying add this feature, add this other feature that's in here. And then I would quickly iterate back with the organization to say, hey, [11:18] >> is this what you meant? And we did that then with Credit Suisse First Boston, with Lehman Brothers, with Goldman Sachs and that allowed us to really get the version one of our products to where it needed to be to sell to the remainder of the financial services companies. [11:37] >> The second thing that we did right was we really thought about who we were trying to sell to. And for us it was the top 30 financial services companies in The US and the reason for that was that those companies, if we were in one of those companies, was easier for us to go to a tech company, a telco company or a healthcare company and say, Goldman Sachs is already using Archer. Shouldn't you take a look [12:04] >> at that, right? So we decided to focus just on those top 30. We broke it down into groups of 10 and we would only sell into those ten one at a time. So the sales team, was my wife, would come back and say, I've got this other opportunity. I'm like, it in financial services? Is it one of those top 10? No. Forget about it. Marketing team would come in and say, hey, we have an RFP. Forget [12:25] >> about it. We're only selling into these 10. And people were frustrated with me in the first year and a half, two years, but what happened was we sold 29 of those 30 companies. And that's what launched us to sell to everybody else, right? It was at the beginning, we were very focused on who we were selling to, why we were selling to them, and then it gave us the momentum to go to a Microsoft and to [12:49] >> a Dell and to an eBay with some credentials to say, hey, here's Citi, Goldman, Lehman, who's using the product. With [13:02] >> our product, what I didn't mention at the beginning was that we were one of the first no code platforms ever developed back in 2000. Anybody remember who the first sometimes I call them the second no code platform really was? Salesforce, right? Before that, there were things that were kind of in that space, but Salesforce and Archer were the first two products that really took a no code approach to solving a problem that related to a process. [13:30] >> So every customer could go in and configure that process just a little bit differently, but it was one code base. So across our 100 plus customers that we had, every one of those were different. None of them had the same UI, look and feel, branding, but they were all on a single code base that was there. So that was a huge advantage for us. [13:53] >> From a people perspective, we found that the best people for us to recruit were coming from some of the big x accounting firms and the reason for that was that, let's take Accenture as an example, when somebody would come out of school and go to an Accenture, they would spend two to three months at a boot camp learning about process automation and how to serve clients and that whole process. They kind of came out of that, [14:19] >> it's like a mini MBA type program and if we could find those people in year three, so they've kind of they've had time at customers, they've been through the boot camp, we could bring them in, teach them our business, those people just excel. And what I didn't mention about Archer at the beginning was that we sold that company in 2009. But that company now does 700,000,000 a year in recurring revenue, 90 plus percent renewal rates going [14:47] >> public this year. I don't know. I hear numbers anywhere between 5,000,000,000 and $12,000,000,000 but number. What's fun about that is a couple of those Accenture people that I hired in year three now run the company. Not the CEO, but they're the two main folks that are there. Of the folks that we had in the company, there's probably 50 people that have been there over fifteen years now. Since we exited, they stayed in, continue to run. All [15:16] >> of them came from the IBM, Accenture, Deloitte, KPMG kind of background that was there. So the main theme there was understand who you want to hire and try to find people that are already trained to bring in back into your organization. [15:35] If we go to the next slide, talk a little bit about because there's lot of people when you're building inside sales teams, which is your third lesson learned here. Talk to us a little bit about how you structure that inside sales team. How many reps, quota targets, things like that? [15:47] >> Sure. So one of the lessons learned was that we should have done inside sales earlier. Bain Capital came to us and said, hey, this is a growth engine, you really need to get going. We had four sales reps that made up the 2008 number that you see there. We had seven sales reps that made up the 2009 number, the 32,000,000 that we had. And I'm happy to share this kind of in the breakout in more detail. [16:11] >> But Bain Capital came to us and said, hey, here's seven portfolio companies that we have that use inside sales. They use this process called a sales bus. Let's go visit them, talk with the sales team leads, understand how they're doing inside sales. Some of them were just getting started. Some of them were doing millions of dollars a month in revenue. A sales bus includes seven people that's on a bus that has a leader and six people [16:33] >> around the bus around the outside. Each person is organized based on their sales in the last month from seat one to seat six that's in there. So everybody knows exactly where everybody else is at. What we learned and what they taught me from that is that, first off, always try to hire a full bus if you can, which is seven people. But if you can't, hire in threes. The reason for that is the best salespeople are [16:58] >> competitive. You hire two, it's okay. One could always be better than the other one, and the other one's okay. You hire three, it's a little different dynamic that's in place. I was deadly against inside sales, to be honest, at the beginning. Didn't think that they could sell enterprise software. In the first months, we had one of our inside sales reps sell an enterprise deal in Germany over the phone. There was no Zoom, any of that, that [17:23] >> was just over the phone sales call. An average rep for us did a million 2 to a million 5 per year. When EMC came in, they're a sales focused company. Those numbers doubled and in some cases tripled per sales rep. Like we had on our enterprise sales team, we had reps that had quotas of 6,000,000 a year. That was their inside sales reps 2,500,000. But for us when we first got started, a million and a half. [17:49] >> Two other things that we learned very quickly that I wish I would have done different is that the global market is much bigger than The U. S. Market. So get your internationalization ready, multiple languages on day one. It's much harder to do that after the fact that's in place. We spent way too much time and attention trying to get ready to go to market globally in year six and seven. We should have just did that in [18:11] >> year one that was there. The second one is architecture matters. We had the same problem. We should have focused on our first feature should have been scalability and speed. And we were focused on features first and that bit us in the butt in year six as we really started to grow. And again, it took we had to pause for about a year to kind of get to where we needed to be from an architecture perspective. [18:36] So Jon, as you move into part two of your presentation, you're being super humble, so we're going to change this to interview style. Is that okay? Right. It's it's way easier. Trust me. So let's do interview style. Talk a little bit about why after you sold EMC, you decided to go into the adviser role. You I mean, did you know you're gonna be bored doing this? [18:55] >> I did not. And there's a couple of things. Off, I thought I knew everything because we were pretty successful that was there, which was I learned very quickly probably in year four or five of that, that there's a lot of different ways to do things. And the way we did it was just one way. I have friends that did it a very different way that were even more successful. [19:13] So what was the style? You were taking equity in companies? Was it mainly b to b SaaS? Or how do you style the advisor shares you were going after? Was that part of your standard deal? [19:20] >> Yeah. So I invested either directly through companies, mainly in SaaS companies that was there. So I would take in a lot of cases, put in two fifty was kind of the minimum number that we would put in. And then I would take an advisor role or a board seat inside of those companies. I found pretty quickly that it wasn't good for me to be the only person in a deal. That the companies that had other people [19:42] >> like me or venture folks that were in the deal were more successful. So then I kind of pivoted to more venture investing. So I have about 11 venture companies that I work with that I've invested in their fund. They invest back into companies and then they reach out to me when they feel that I have expertise in a particular area that can help the entrepreneur. And that worked much better for us. [20:04] And then going to the smartsuite story, and this is so fascinating because you ran EMC, you ran Archer profitably, you're growing like crazy. Did you guys see part of the Bain deck already? Think you already shared Yeah, that, incredible story. So how does your brain now switch to the thing of, Okay, I'm going be pre revenue for three years. I'm going spend $12,500,000 on MVP. I'm to hire over, I think, hundreds of contractors. How did you [20:26] get your brain in that space? And why did it take so long and so much money, in your opinion? [20:30] >> Sure. Well, let's talk about the idea first that was in place. So as I visited and worked with these 400 venture companies that I had, one of the first questions that comes up most of the time is, what's the infrastructure that we need to have in place as an organization just to get started? Right? We need sales and marketing and HR and IT and customer success products to do things. And I got really frustrated with always [20:51] >> having that discussion. And the idea from smartsuite was to transform the way businesses get work done by providing a single platform that could manage any workflow process or project in the company. Right? So it's basically taking hundreds of point solutions that people have, building that into a framework where all of that can be in one core platform. So you don't need all these different sales tools, marketing tools, HR tools. You just you've got one product that [21:16] >> provides 90% to 95% of those capabilities right from the beginning. So the lift was massive. Right? It's a big idea. [21:25] >> We knew it was going to take about two years. It actually took two and a half years of development time, about 100 developers that were just working night and day to kind of if we go to the next slide to kind of build out all these core capabilities in this platform that would make that a reality. And once those capabilities are done flip to the next slide. Well, talk real quick. [21:44] You did something here also interesting. I joke that we're not far away from somebody launching a SaaS company and taking it public, they're the only employee. You have remote.com. You have these things. You can just hire a bunch of contractors. I'm just someone's gonna do it one day. Talk to me about why you went this route. Mean, hired what are the numbers? You hired hundreds of contractors. [22:01] >> Yeah. So we we basically we have no employees in place. I have two co founders. [22:08] >> We hired teams of people inside of companies. I think we have five different main companies that we work with from a development perspective. So we have a mobile team. We have a web team. We have [22:17] And names on them. Because people aren't on computers. What's the mobile team you used? [22:20] >> Yeah. So we use e creative out of Ukraine. I'll talk about Ukraine in just a minute. We use Gearhart out of Ukraine. Then we use a company called agency enterprise out of California that does a lot of work for SpaceX. So they're kind of our high end developers. We way overpay for them, but they're really, really good. [22:37] Come on. What's way overpay? [22:39] >> 12,500,000. [22:40] >> Yeah. They they go for about 175 an hour for their for their core developers. Right? The Ukrainian folks are typically in the 50 to $75 an hour rate. That's a similar quality, but The US folks have a little more experience working with big data, some of the more complex architecture issues that we need to solve. [23:01] So it's out now, Over 200 workflows, you've now launched. Talk to me about building up to the launch, what was going with your brain, how do set the initial price point? [23:10] >> Yes, we launched six weeks ago, think the second week in January for the first time in that first six weeks we've had about six [23:16] Wait, wait, on. Okay, before he tells you his numbers. So he launched the paywall six weeks ago. Okay, so what I'm going do is on the count of three, everyone just say how much monthly recurring revenue you think he's doing now sort of six weeks in after building three years. Okay, ready? Monthly recurring revenue. Ready? One, two, three. Okay, so the average is about 12.5 ks across the sample size of 118 people. Are you comfortable sharing [23:43] what MRR is today? [23:44] >> Yeah, share the range. So we're in the 85 to 90 ks per month range. [23:50] 0 to $1,000,000 in ARR, this is why I'm like, you need to come in. Because I'm like, I'm going to grill this guy, spend so much money on MVP, but now the way you've built your tentacles into so many distribution things pre launch, you launch and go from $0 to $1,000,000 run rate in basically four point five weeks is incredible. So speak a little bit to the distribution tactics you set up pre launch, comparison [24:10] sites, things of this nature. [24:11] >> Yeah. So I think the first thing we did was we've automated the process to come in with a trial account. So we make it super easy for someone to buy enterprise level software by clicking on your site and starting a trial. Our base pricing starts at $10 per user per month and then all the way up through our enterprise is $35 per month per user. Everything that we've done is organic. So we reached out to a [24:35] >> lot of the comparison sites and filled out surveys for them to do or request for them to do reviews of our products. [24:41] Just name a couple of those sites. [24:43] >> Yeah, we started with Product Hunt, actually G2, Capterra, just that whole group of sites where they actually do product reviews and let people come and view your product. A lot of them have signed up as affiliates through our affiliate program as well. [24:58] What's your kickback on the affiliate program? [25:00] >> So we've had [25:01] >> so far, think today we're like three twenty five affiliates that have signed up. We offer them 50% commission of the first year revenue. So that allows us to have a sales force that's kind of international from day one. [25:13] And then it ends 50% year one? [25:15] >> Ends at the end of year one. So basically we're overpaying for those customers in the first year, but those customers we wouldn't have without those affiliates. So So I don't feel like we're overpaying, we're breaking even. But in year two, we'll start making money on the deals the affiliates bring. [25:29] And how many of the three twenty five affiliates have earned at least $1 already? [25:32] >> I don't have an exact number, but I would say probably 35%. [25:35] Interesting. [25:36] >> A lot of them have accounts that are in trial right now that will convert after thirty days. [25:42] And so the interface looks incredible, right? You can speak maybe a little bit to that here if you want before we move into other takeaways and wrap up. [25:51] >> Sure. Yeah. So what we found when when I started meeting with customers was that the biggest single thing that they needed from a work management platform was the user interface that focused on the people that actually do the work, which are people ages 23 to 38 is what we found. So we I sought after and tried to find a person or a team that could help me with the UI that had done something different that I [26:12] >> had never seen before. And I happened to find a guy of all places in Bulgaria, Sofia Bulgaria. I went and met with him. He's just interesting and different. [26:20] How do you find these people? [26:21] >> What do [26:22] you do on Craigslist in Bulgaria? [26:24] >> I just got online and used my network. I looked at Upwork, Fiverr. I just tried to find the top people and just looked at the style and the type of work that they've done. Storgen had never worked in this industry before, but he had that eye and that style that I liked that was there. So I met with him. We spent two or three days together. We just hit it off. I mean, he's just a super [26:45] >> great guy. And he was just super excited. And I said, you need to leave all your other customers, and you need to work with me 100%, just me. And after the first end of the first three days, he said, deal. [26:56] But you met him through Fiverr or Upwork? [26:58] >> Met him through Upwork. [26:59] Yeah. This is also a tactic that I see over and over, but very people will say it publicly. But this is a great way to find great talent. Because you put up the same project, so you have a design spec, to 30 people on Upwork. You pay them all their rate. You collect all the designs. Then you pick the best one. I don't know. I'd fly to Bulgaria. Fly and meet them, and then try and move [27:18] them full time. So he's now is he basically now full time with you? [27:21] >> He is. His team. So he's got a team of three or four people that work with him. Very reasonable rates for that team and they got rid of everything else about a year and a half ago. They that's basically our design team. [27:33] Anything else you want to add in before you take it home? [27:35] >> I just say [27:36] >> we did the same thing on the dev side. We found our our core people in all places of the Ukraine. I'd never been to Ukraine before so I flew to Kyiv met with the first person that was there. I still remember after about an hour I am like oh my God I found the perfect person with the right team to actually build a product like this and I have been searching for like six months and found [27:54] >> them there. Fast forward about six months after that I was searching for a mobile team. [27:58] Well Jon hold on so obviously the sensitive you know there are things happening right now talk a little I mean how is your Ukraine team doing or I mean I don't even know the right question to ask how are you thinking about those guys? [28:08] >> Yeah I wanted to mention that at the end it's They're in a difficult spot. And, you know, they're people just like us. They talk like us, work like us. I mean, they're just normal people. They wake up one day and they're getting bombed. And we have people in cities that don't have places to live anymore. They don't have gas, electric power. They're cooking outside with fire. They can't leave the cities that they're in. It's just incredible. [28:31] >> Some people we can't communicate with for two, three days at a time until they get a mobile signal to just send a text to let us know that they're okay. From a business perspective it's been challenging with the work that we're doing but we've kind of got that worked out in the last week or so so it hasn't affected us but there's about 60 people there that are just outstanding people that are really struggling. [28:51] And there is a lot I mean when you look at all of the speakers and everyone's FTE headcount or full contractor headcount about 35 to 40% of the speakers have team members in Ukraine. Don't Mikita is not here but you will hear from him tomorrow. Yeah I mean raise your hand if you have hired talent in Ukraine and they are phenomenal. I mean look at that. It's right? Phenomenal talent. So obviously sending the best thoughts, prayers, everything else....

[00:00] Hey, folks. My guest today is Jon Darbyshire. In 2021, his team launched SmartSuite, the work management platform that manages any process from any industry on one platform. In 2000, he founded Archer Technologies, an enterprise governance, risk, and compliance software, giving business users the ability to adapt software to their unique business requirements. Again, SmartSuite today is the work management platform. Jon, you ready to take us to the top? [00:22] >> I am. Let's do it. [00:23] Okay. I have to ask, what on earth prompts you to jump into this space? You've got Monday that's now public, trading at a ridiculous ratio, throwing gobs of money at PPC. You've got Zeb Evans at ClickUp raising gobs of money, throwing money at the space. What's your niche? How do you win here? [00:37] >> Yeah. We're we're one level above those organizations. Our goal is to help organizations manage any process or project inside of a single platform, but it has more enterprise features than you'll find from a Monday, a ClickUp, and Airtable type. So if you you have workflows and you wanna manage your business in a single platform, we provide those capabilities that allow you to keep keep everything in a single platform. [01:00] When you say a process or a workflow, I mean, is this effectively like if you take MuleSoft, you know, the enterprise version of Zapier, plus, like, you, the enterprise version of ClickUp, and and you put those two things together, that's sort of where you're playing? [01:13] >> Yeah. I I had a good analogy this week from a reporter that talked to me that said if you took Airtable, Notion, and ClickUp and put them in a blender, out came SmartSuite. We're taking the capabilities of those three different segments of products, putting them together into a single platform. [01:28] I see. Okay. So so those on those platforms, you're talking ARPUs $20.30, $40 a seat. I imagine you're more expensive and more in the enterprise. What's the average company pay you per month to use the technology? [01:38] >> Yep. No. Our pricing model starts at $10 per user per month. For our team edition, moves to 25 for our professional, and our enterprise is 35. The the the really, the vision of SmartSuite is to bring enterprise level features for work management to the masses at a price point that's not been seen before. So we're really passionate about providing SMBs with enterprise level features at a price point they can afford to be able to help grow [02:04] >> their business. [02:05] So what I don't know how many seats the average customer has. What does the average customer pay you per month? [02:09] >> Yeah. Average average seats are 10 to 12, right now, and it we're about fifty fifty between, our team and our, professional edition. [02:17] Okay. Got it. So 10 to 12 seats at 10 to $35 a month. Your average customers are paying $200 to $300 bucks a month on average. Exactly. Something like that for 10 seats. [02:26] >> Correct. But we go all the way for our enterprise accounts, we support all the way up to 5,000 seats per account. [02:32] Do you have someone paying for 5,000 seats already? [02:34] >> We're in discussions, but we don't have have someone paying currently. [02:38] Well, hey. Congrats. That's extremely exciting. Nice work there. What what's the largest number of seats on the platform right now in one company? [02:44] >> Yep. About one fifty. [02:46] Okay. That I mean, that's that's getting up there. That's great. [02:48] >> Yeah. We've launched no. We've only launched for four weeks, so we've got a lot of stuff in the hopper. We've had about [02:54] You've only been selling for four weeks? [02:56] >> Correct. Yeah. We have about 400 accounts that are on the platform in the last four weeks. [03:00] 400 paying? [03:02] >> Yeah. Exactly. [03:03] Okay. I mean, how did you [03:04] go from zero to 400 paying customers in four weeks? You must have built a big wait list or something. [03:08] >> No. We, well, we we had a small wait list, but we, in the second week, we just kinda started seeing lots of volumes of customers coming to the website. We have a free trial, and then they can convert directly from the trial. [03:20] Wait. But, I mean, how do they find you, Jon? This is incredible. Four weeks. I mean, am I doing this math correctly? If you have 400 customers paying on average $250 a month, you went from zero to a $100 a month in revenue in four weeks? [03:30] >> Yeah. So we're we did a big push on LinkedIn, which we had a pretty big network of folks that were there. We were up on product hunt, and then we started going to the comparison site. So the majority of that is organic traffic that's coming back to us. We just started our first paid search campaign for, like, $10 last month. So everything's been primarily organic up until this point. [03:52] Jon, this isn't if I'm understanding you correctly, you do understand this is incredible what you've done. [03:58] >> I I think we're we're looking for bigger numbers, but but, yeah, I think we're we're we're going after a lot. [04:02] My numbers are right. Right? You're doing about a $100,000 a month today in revenue and five weeks ago, you were doing nothing. [04:07] >> Correct. Yes. [04:09] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:32] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:57] get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:18] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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 [05:44] going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:06] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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. Alright. Let's jump back into the [06:32] interview. I mean, this is great. Okay. I wanna dive into this. Right? So Product Hunt launch, you have 251 upvotes. About how many signups did you get from there? [06:40] >> I don't have the exact numbers in front of me, but it it's pretty small. Probably twenty twenty five probably came from Product Hunt with the the discount code that we provided. [06:49] Oh, those are actual paid sign ups came from Product [06:51] Hunt? [06:52] >> Correct. [06:53] Okay. Do you know how do have a free option? How many free users came from Product Hunt? Do you know? [06:57] >> No. We we do not have a free option currently. It's something that we're considering, though. [07:01] Interesting. For someone else looking to launch on Product Hunt today, what should they give in terms of discount code? So you charge $20 a seat usually. What discount do give Product Hunt users? [07:08] >> Yeah. We give them a 25% discount for the first three months. [07:12] And that worked. It sounds like fairly nice. Let's go to the the next tactic you just mentioned, LinkedIn. When you say you pushed it on LinkedIn, what does it actually mean? [07:20] >> Yeah. So we we set up a company profile on LinkedIn, and then we used our personal accounts. I think between me and the co founders, we probably have about 8,000 connections that were there, so we pushed back out into that community, and then it's just been word-of-mouth. [07:34] Interesting. But what did you post on your personal profile? [07:37] >> Hey. Like, hey. [07:38] We're launching, or what was the strategy We [07:40] >> do two or three posts per week, that's been coming in. So we first did the announcement that we're launching, and then we started focusing on the types of things and ways we could help customers, kind of starting with project management and then showing the different categories of solutions that we can help people with. [07:55] Yep. Yep. Okay. And I see nine employees on the LinkedIn profile, 213 followers. Is that right? Nine folks full time? [08:02] >> No. It's a little deceiving. So we have a little unique company here in that we're in nine different countries around the world. We have about a 110 people that are part of the company. We have a lot of contractor and contractor firms that we've hired for specialty areas, feeling that we do not need direct employees just to start a a traditional company. So, obviously, we've had about 90 developers working for almost three years to build the [08:26] >> core platform that was released last month. So the core of the company is on the development side, And then we're just beginning to bring in sales, marketing, PR, product support, those types of folks. [08:39] I love the idea of keeping fixed expenses really low in the early years as you're building. You sound like you've done that to a T. It's part of your blood. Tell me, I mean, so you say 90 developers, are you using firms like KodiTOS or Simform or what kind of outsourced dev shops are you using? [08:53] >> Yeah. So, you know, when we started SmartSuite, we wanted to kind of find that development community that really understood what we were trying to accomplish and had some experience in that area. Of all places, we found a great firm in Kyiv, Ukraine. Went over and visited with them, never expecting to be outside of The US, to be honest. Met them and just walked away just blown away with the capabilities of the organization. So they were kind [09:15] >> of our core team that we brought on. We probably have 35 people with that organization. We did the same thing on the [09:22] Can I ask what that organization is? Do have a website? [09:24] >> Yeah. Their name is Gearhart. It's gearhart. Gear,gear,heart.io. [09:31] Wow. And and how did you know? I mean, it's you know, picking up from beautiful California and going over to Kiev to do diligence on this firm is a lot of your time and energy. How did you know it was gonna be worth your time or energy? Like, how did you find these guys? [09:45] >> Of all places, found them on the Internet. Just searching for, development shops, I probably looked at 50 or 60. And I started in The US, I just couldn't find what I needed, or people were too busy to bring on a project like this, so I turned it more international. I looked on posted some stuff on Upwork to try to get sources coming in, so I probably narrowed it down to five folks, and I just kept coming [10:08] >> back to this one gentleman in Kyiv, and I finally decided I just need to go spend two or three days with them, get to know them, get to know the people, see if we had a connection. And the connection was immediate. Like, I I just enjoyed them as people, and then technically they were as good or better than anyone I've worked with before. [10:26] This is amazing. Okay. You mentioned you have over 100 firms you've sort of contracted with. I imagine Gearhart, in terms of money spent, is probably up there at the top, right? Your dev shop? [10:35] >> It is. So we have two other firms just like Gearhart. So we have a mobile firm that, of all places, was in The Ukraine as well. I met them in The US, had no idea that they were based in The Ukraine. They came highly recommended from a friend of mine. And then we have a third organization. [10:52] Who were they? They have a website, the second one? [10:54] >> Yeah. Yeah. It's ecreative.com, and it's k with creative. [10:59] Okay. And who's the third? [11:02] >> The the the third is Agency Enterprise in Venice, California. They do really high end development work. I'm not sure if I can say all the names that they work with, but they work with Elon Musk as SpaceX and do some work there, and that's how I kind of made the connection to them. They're just an amazing group of very talented people. [11:23] So how do these all work together? So so, I mean, is Gearhart everything that's desktop? ECreative, is everything mobile? And Agency Enterprise looks over everything? Or how do they function? [11:32] >> Yep. So the mobile part is just e creative. We also have a team at e creative that does web along with the agency enterprise team. So we have three different development shops, plus one of my cofounders is a CTO. The benefit that that gives us is we have CTOs at each of those organizations and internally. So the level of expertise that we kinda bring to the project is a lot a lot more enhanced than you would [11:53] >> typically find in a startup environment. And we do daily stand ups with those for about an hour and a half each morning. We go across each team individually, and then twice a week, we have all the teams together, myself and the CTO. So a lot of coordination, but it works well for us, especially for the international folks. We have meetings with them in the morning our time, which is at night their time. We wake up in [12:16] >> the morning. They've implemented all the stuff we talked about the day before or they had questions about, and we move on to the next topic. So it allows our development to be very efficient. [12:26] It's incredible. It's very incredible. But just to be clear, are only nine full time people that manage all this coordination across all these contractors. [12:34] >> Yes. Currently. We've got we're growing really fast. We've got lots of opportunities for new folks to join. [12:40] I wanna go to the comparison site strategy here in a second. We talked about LinkedIn. We talked about Product Hunt. We're gonna save comparison sites here for a second. You mentioned you've been building this for three years. When did you guys write the first line of code for this? [12:50] >> It was three years ago in January. [12:54] Yeah. The '20 what? [12:55] >> 2019 or '18? '19. [12:56] 2019. Okay. And you were basically at no revenue for three years. Dev shops and a 100 contracting firms is not cheap. How did you fund the business? [13:05] >> Yep. I funded it myself. We put in about 12,500,000 to date to kinda get to where we're at. The the thought process was we didn't wanna be another startup company that that launched and said we have all these features that are coming and kinda bring on a typical MVP. We felt like to compete in the space, we needed to have a fully functional, you know, platform that had feature sets that our competitors didn't have. So that's [13:28] >> why we waited so long. We're also very quiet. We didn't update our LinkedIn profiles until last month. We didn't tell anybody what we were doing until the announcement actually happened. [13:36] That's amazing. Okay. Now when you say you guys put in 12.5, is that you, your personal money, or all the cofounders together? [13:42] >> Nope. That's that's my personal money. [13:43] Okay. I mean, Jon, everyone's gonna be wondering, is this guy how to get so freaking rich? Right? Did you sell a company before this or what? [13:49] >> Yeah. I founded a company in the tech space called Archer Technologies. We sold that to EMC, and then it got packaged up and sold to Dell. It's a company that's just killing it. They're gonna go public this year. I I don't know their exact numbers, but I would imagine they're in $650,000,000 recurring revenue range per year right now. [14:08] Where were they when you sold them to EMC? [14:11] >> Revenue wise, you mean? Yeah. Yeah. We were at 40,000,000 at that time. [14:15] And what year was that? [14:17] >> It was in 2010. [14:18] 2010. Okay. Well, okay. Not not that long ago. Okay. And I mean, can I ask you, did the EMC put out what was the which was the purchase price? [14:24] >> Yeah. It was 200. [14:26] 200,000,000. Okay. So interesting. And was that a that's pure software? [14:30] >> Yeah. SaaS based software. [14:32] Okay. And you own the majority of that business, more than 50%? [14:34] >> Yeah. Yeah. [14:35] Wow. Okay. That makes sense. Okay. Now the story starts to come together. So this is your sec and by the way, I always like founders, you take one dip, you take a second dip, you take a third dip. Did you hold on to some equities? So when the Dell sale happened, you got another bite at the apple and we get another bite when [14:49] they go public? [14:50] >> I didn't. In that particular instance, it was an all cash purchase price, no stock at all, which was great for us. That allowed myself, my wife, my mom, which was the founder of that company, to then start what we call the Archer Foundation, which is a family foundation. We focused on entrepreneurial programs, women's initiatives, and youth programs. Wow. And through that, in our own personal investing, we invested in about 400 companies over the last ten years. Startups [15:15] >> either through venture firms or direct. And really the genesis of SmartSuite was that when we would work with these companies, one of the first questions that was asked is, how do we manage all the processes internally to build the business that we need to build? And we were always trying to cobble together all these different systems. It typically was four to five different things they needed to do. And I got frustrated with that and finally just [15:36] >> said, we're just going to build what those organizations need to manage work in a single place. And that's what kind of started this journey. [15:43] That's amazing. Okay, so do you own a 100% of the business today? [15:46] >> I do, yes. [15:47] That's amazing. Okay, so what gave I mean, the question still here, I'm trying to think if I was in your shoes and I sold something for $200,000,000 all cash and I had a 100,000,000 to play around spending 10 percent of that for three years, I'd have to have a lot of conviction about that thing I'm spending $12,500,000 on. What gave you this conviction? Was it just your own use case? You needed this thing? [16:05] >> Yeah. I think it was my own use case, but it was also, you know, I built one of the first no code platforms back in 2000, which was Archer Technologies. The other big player in the space that started at the same time was salesforce.com with Benioff. So I have experience in that space, and what's changed over the years is the technology platforms now allow us to build the features that we really wanna offer in a platform [16:26] >> like this. You can bring together, you know, the the communication, the collaboration, the file management, you know, the spreadsheets, the doc capabilities all into one place with a really rich UI so that people really don't have to jump between tabs and go to other products to get stuff done. They can really do the work in a single platform. And that's where the conviction came from, was how do we pull all of those elements together into a [16:49] >> single platform? But then it was also based on the UI, and that the UI that we built is built for people ages 23 to 38 who are who we feel actually does the work in an organization. Now we see reports and dashboards and other things happen for people older than that, but we spend a lot of time understanding that particular genre, you know, millennials and Gen Zers, how they like to work, how they like to be [17:11] >> social at work, how they like Facebook type components and sharing and collaboration built in. So that's the audience specifically that we're going after. [17:20] Yeah. Well, you look like just before the interview, my research team, when you view the website, you look like a tool that could be doing $50 to $100,000,000 bucks a year in revenue. So with the three years of investment to me, it makes sense. The story makes complete sense here. Now, have you spent that full 12,500,000 already over the past three years or is there still some in the bank? [17:36] >> No, that's the I just funded each month as we need to fund it. [17:39] It's invested. [17:40] >> Yep. So all that's currently invested. We'll be looking at a series A here in the next month or two. But the intent was to put all the capital in to get us to the point where we needed so we could be very quiet about what we were doing. [17:53] Well, again, this now why you went from zero to 1,200,000 run rate in four weeks makes a lot of sense here. So when you say you wanna go out and look at a series a, about how much do you wanna try and raise and at what valuation? You don't need to sell equity. You're you're personally wealthy. Right? [18:06] >> So why do it? No. I think that the connections that would come through the venture community and the value add that they bring in certain areas is what we're looking for. It's not just the cash. It's the relationship that's there. Most likely to be a series of two to three venture firms that would be involved, not just a single firm that was there. On the raise side, we're all over the place right now on how much [18:26] >> we need to raise over the next, twelve months to really get to an interesting series b. And in some cases, people are pitching us on just adding on to the series a I mean, excuse me, to the seed round that we've already done and positioning the series a [18:41] When was the seed? [18:43] >> Well, the the seed, I considered the money that I put Yeah. Yeah. [18:47] Now did you loan the business the 12.5 or is that an equity investment? [18:50] >> No. [18:51] That's equity investment. [18:52] >> Okay. Interesting. Got it. Interesting. [18:53] So so do you don't have really a target? Do you have a valuation target? You can get a $50, $60, $100,000,000 valuation? [18:58] >> We're in that 100 range is what we're talking about right now. [19:02] Yeah. It's hard because, I mean, there's a bunch of things you have that no one else has. One, a successful exit, right? So you can argue you're sort of a proven commodity. The second is, you know, your money's where your mouth is at. You put up, you know, a lot of your net worth into this thing, and you went from 0 to $100,000 a month very quickly. So question is, how much growth can you keep driving over the [19:16] next twelve months? You know what I mean? Exactly. Yeah. Very cool. Okay. Well, it'd be interesting to watch what happens. Talk to me about how you've done sales. All no touch to date or or do you have a sales team? [19:27] >> We have just a small sales team. So my wife, Tara, who helped me found our last company, Archer Technologies, she jumped in about four weeks ago to kinda get the sales kicked off for us. I don't know that she's here for the long term, but she's kinda getting things going right now. And what we found to date is that a a lot of our customers just want somebody to contact them, [19:47] >> have a quick conversation, do a quick demo, and she helps coordinate all that activity between me and the three there's three founders, myself and two cofounders. [19:56] But you just pay them a lot. Right? They don't own any equity? [19:59] >> They each own yeah. They each have a small piece of [20:02] Oh, okay. Like, five under 5%? [20:05] >> Correct. Yeah. [20:05] Okay. Got it. So you own, like, 90%. Two co founders own maybe another 10%. You didn't cut your wife, Tara, in at all? [20:11] >> Well, she's in the 90 Yeah. [20:14] Yeah. She gets 45% of the 90. Right? That's how that works. [20:17] >> Yeah. She gets 60% of that 90, I think. [20:20] That's amazing. Talk to me real quick. You mentioned comparison sites. How are they working for you? How are which one's the most giving you the most leads per month? [20:26] >> You know, Capterra is is probably you know, Product Hunt did a pretty good job. We we just get a lot of bandwidth from them, and I kinda consider them to be a comparison site because people come in to just find out about new software and then look, you know, against the current players. But, you know, the Capterras of the world are where the real comparisons happen. And we've really just kind of dived into that in the [20:46] >> last couple of weeks, but it allows us to show potential customers that are coming in the comparisons of how we compare against competitors. Even if the site's not sending us leads, we can send our clients there to kind of understand that. [20:59] Paying for premium placement on Capterra yet or no? [21:02] >> We are not. We're just in the free version on all those. So we're on about nine sites today. I think there's 30 that are on our list that we're trying to get. [21:10] John, can you name a couple of those? Smart, Capterra. Which other ones? [21:13] >> It's I'm drawing a blank. It's the Gartner based sites. There's sites. Three of them that fall under Gartner. [21:19] GetApp. Yeah. [21:21] >> Yep. Yep. [21:23] Which other ones though? Just the Gartner ones? [21:25] >> No. I I just don't have that list in front of me, and I'm drawing a blank. [21:29] Can I follow-up with you? Can I follow-up with you afterwards? [21:31] >> I can shoot that to you as soon as we get done. [21:34] Okay. I'd love to see that. Yeah. Because these are great sites for leads and traffic if you can sort of play the game the right way. The first step is driving a bunch of reviews. You already have 23 on Capterra. So if you wanna move to pay it on Capterra, eventually you'll be in a nice position to do that. [21:47] >> Exactly. [21:48] Fascinating. Okay. Gosh, you know, you're the closest interview I've come up to almost 3,200 of these where I'm I'm looking for a founder that's gonna take somebody public with only one full time employee because they use contractors. You're like the closest version to that that I've found so far. [22:01] >> Yeah. I think, you know, we were going down that model before COVID hit. Right? We wanted to have more of an international company. We didn't want the employees in one location. I'm the only person other than my wife that's based in Newport Beach, California. We're all remote. And now that's not such a big deal, but that was kind of the genesis of the company was let's find the best people wherever they're at worldwide, and let's build [22:22] >> the company around that as opposed to geographic location and 30 miles around that location for people to come to work each day. So we expect to continue to grow our company in this distributed model. [22:33] Very cool. Jon, let's wrap up here with the famous five. Number one, favorite business book. [22:38] >> I [22:43] >> don't know if it's a business book, but, you know, the Bush Family Dynasty is just a great book that kinda teaches you about, you know, how that that family was put together and it was planned what happened, and it was planned that the, you know, that the a president or two presidents would come out of that journey, but it talks about their financial background. So I I enjoyed that quite a bit. [23:04] Number two, is there a CEO you're following or studying? [23:07] >> You know, Steve Jobs was was someone that I followed quite often and just the approach that he took to building Apple, which was different. And I I think about that quite often that he went against the grain of what was happening and built the company the way he thought it should be built to reach the customers that he wanted to reach, and we're trying to take the same a very similar tack with SmartSuite. [23:27] Number three, what's your favorite online tool besides your own for building SmartSuite? [23:32] >> Online tool. You know, we use Intercom. I don't know if you're familiar with Intercom that much. We use the heck out of that product. It's an amazing product. [23:41] Number four, Jon, how many hours of sleep do get every night? [23:45] >> I would say maybe seven. [23:47] Okay. And you're married to Tara. You guys have any kids? [23:50] >> We do. We have, two children. [23:52] Two kids. Okay. And how old are you, Jon? [23:55] >> 57. [23:56] Last question. Something you wish you knew when you were 20. [24:00] >> Wish I knew when was 20. You know what? Don't don't rush success. You know? I I think you just chug it along and it's gonna happen, but don't worry about it when you're that young. [24:08] Guys, there you have it, smartsuite.com. Taking Notion plus Airtable plus ClickUp, putting it in a blender, and that's what you get. They've gone from nothing to a $100,000 a month in revenue in four weeks. The question is, how did they do that? You're going learn that in the interview. Got going about three years ago. Jon had a successful exit, used that cash, put in $12,500,000 of his own money into this new platform with a lot of [24:27] contractors, very, very small fixed expenses in terms of full time employees. It's the model of the future, I think. Watch out for these guys. Growing quickly. Potential Series A coming up later this year. We will see what happens. Again, two fifty Sorry, 400 customers paying about $250 a month right now on average as they get going. Jon, thanks for taking us to the top. [24:43] >> All right. Thank you. [24:45] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [25:11] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [25:33] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up [25:55] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [26:14] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. See you.