How Smith.ai CEO Aaron Lee grew Smith.ai to $26.7M revenue and 3K customers in 2024.

guys smith.ai is doing what did 1.5 million Revenue last month over 20 million run rate that's more than doubled from a year ago they've got 600 folks on the team and what they're doing is they're helping folks do they you know work with customers much better in a more efficient way whether it's voice inbound chat inbound messages they're using AI to power this but I'm like most AI companies they have real Revenue again Voice Web Chat outbound SDR as a service launched back and caught 2015-2016 after Aaron sold his first company red Beacon to Home Depot then stayed at Home Depot through 2015. hey folks my guest today is Aaron Lee he's the co-founder and CEO of smith.ai and former CTO of Depot his former company red Beacon won the TechCrunch 50 startup competition in 2009 he's one of the funding founding Engineers sorry at Google video and holds a PhD in computer science from Princeton University now building smith.ai which is human centered AI customer engagement Aaron you ready to take us to the top yep absolutely excited to be here happy to tell you more about Smith Ai and some of the excitement in the AI development on customer engagement we love that what years were you with Google video uh it was in 2004 very early on I joined Google and back then Google had web search image search but video was a new thing so uh I built a team with my another engineer and before we know it it's a team of like 100 people and that was 2004 to what year did you leave uh 2008 wow that's an eight yeah when I joined like Google had 2 000 employees when I left it was 20 000 like 10x wow okay so um so that's do you go right into red beacon in 2008 yeah so I left in 2008 exactly on the month of the financial crisis and uh start with like the other two ex-googlers and um we thought wow I mean that's a good time to build company and uh and that's how we started wrapping interesting so so what happened with rugby can you sell it you shut it down you what'd you do with it yeah so we spent a year has done building the company and uh back then you have to remember like there were no funding at all we say great we're gonna bootstrap the company we're going to build the product test down and uh by the time we launch in TechCrunch and took the top prize in 2009 like uh we start like we actually got the funding within like less than a month from ramrock and a Mayfield how much did you raise seven and a half and what evaluation uh I actually don't remember I think it was like yeah probably close to uh 30. yeah and then what happened after and we just took the money expanding to Nationwide and uh replicant was a platform to connect the homeowners with a home improvement professionals and uh when we start expanding the platform to Nationwide uh we got the notice of Home Depot and turns out Home Depot has been thinking about it for quite a while because they actually have two size Marketplace the pros like the contractors and homeowners now what size did you grow red Beacon do before you decided to exit in terms of Revenue we're talking like a million 10 million something in between yeah I think it was some somewhere like 10 plus okay around the time but um but I think the biggest opportunity is Like Home Depot has all the ingredients they have the distribution channels 2 000 stores they have the two-sided Marketplace homeowners and the pros and they're also very excited to get into the like building their connection between the homeowners so if you go to any of the Home Depot store today you will see my work there I think they rebranded as like Pro referral that's very cool what did you guys I mean it sounds like you're building something red Beacon it's doing well you have more than 10 million in Revenue what did you like about the Home Depot offer why did you guys accept I think like when we accepted the offer like we were looking at how do we expand it to even faster to to even like adoption right we could raise money but on the other hand when we raised the money we only got the money we don't get the network effect we don't get the distribution channels Home Depot actually provide all of the above and we got like very significant support from the density our friend Blake and uh it was our biggest sponsor he saw the opportunity to expand from like products which is like selling the stuff on the Shelf to services and are you able to share a range of like what multiple you guys sold for uh I actually don't remember yeah okay what was it an amount that you mentioned the the valuation on the raise was 30 million ish valuation did you sell for more than your valuation so that everyone made money or was it more like a remote like the investors are very happy uh all the employees are very happy yeah okay okay just raise one rank and okay 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 valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 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 1.2 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 evaluation 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 a lot of times when a company Like Home Depot buys a startup like yours there will be a portion of the deal that is cash up front a portion that is stock options and a portion that's an earn out how did you think about your deal yeah I think we we definitely got the heavy size on the um on the cash side and then there's a bunch of like earned owls so that we they could retain the talents and the team and also one of the biggest reason why we got excited is they actually want us to make it really big like if you look at Home Depot on the services settlement side now they're multi-billion dollar bill so they already have that significant like interest and incentive to make it really a big business I see so Aaron is it fair to say more than 90 of the total deal price was upfront cash yeah I would say so yeah okay got it and then okay so they buy you um how long do you stay at Home Depot I actually stay uh we've got the quiet in early 2012 and I stayed till uh 2015 like almost three years and that was really the time it took to like take out idea and our model and our platform and expand it expanded to Nationwide and that was when uh what I just tell you a little bit about the Home Depot terminology like they call this like a Improvement professional the pros and they think about it as more like these are the pro Community because that what they need is a little bit different than the homeowners so you need to build a platform to connect these two sides of the marketplace and that was when we when I was seeing a lot of challenges from the pros that they just don't have the time and the money and the know-how on dealing with like customers if it's going so well why'd you leave uh it was part of the thing that like uh you need to remember so I I work in uh Google from 2000 people to 20 000 people when I was at Home Depot the size of the company were 400 000 people...