How SudShare CEO Nachshon Fertel grew to $2.5M revenue and 3K customers in 2022.

hey folks my guest today is mort fortel he's a serial entrepreneur who started his first business at 18 years old he has a private equity portfolio that consists of sud share two other businesses and real estate holdings sud share is basically uber for laundry we're going to jump into it today more you ready to take us to the top yes let's do it all right so how did you how did you get in is this just a space that's sort of unsexy no one's thinking about and you said there's an opportunity here sort of it started in 2017 with one comment my wife made she was home with five kids buried in laundry and she's like this is crazy i can tamp an app and get to the airport face time someone on the other side of the world but i'm still doing laundry like my grandmother and she was right technology's made everything so fast and easy except for this chore that we hate the most and that takes the longest longer it's actually shocking there's been no innovation in this space since the washer and dryer almost a century ago so my son was in the laundry room at the time and he's a typical teenager he was 16 years old he's like look i'm not helping you with the laundry mom but i can solve this problem for you i'll build you an app so we thought he was kidding but we homeschooled our kids and we taught them you could do anything and he believed us and so he looked at what uber was doing and he went and built this business and it launched in baltimore in 2018 uh and uh we haven't looked back it's been growing like crazy ever since and i've been helping him you know with the business so what is growth how do you measure growth here is it pounds of laundry clean per week or what well we've been growing about 10 to 30 percent a month every single month for a couple of years now but what i'm asking is how do you measure growth is it revenue is it pounds of laundry done is it number of trips to the laundromat what is it we have multiple kpis that we monitor on a monthly basis um of course gmv which is you know fancy terminology marketplace terminology for revenue um also new customer acquisition um those are two key kpis that we look at interesting okay so are you focused full time on helping your son with such share are you managing a larger portfolio of companies as well when it started a few years ago it was mostly him because it was mostly you know creating the technology building the apps all the technology in the background i can't write a line of code so he was working over all that but after we launched and as we started to grow and the apps really got traction so then it really became a business and we became um i mean we were always partners and co-founders but i became much more active in the business at that point i mean now it's the point where i spend 99 of my time on sunshare fascinating and how old is your son today uh he was 16 at a start he's now 21. how much equity did you were able to get out of him we both had a substantial portion of equity but did he did he did he say dad i'm keeping more of it you gotta you're taking less than me uh no no i always had uh controlling interest okay so what did you write sort of a check up front to help him sort of have some money to build the thing or what sort of gave you that that ability to command more equity um yes i i wrote the check he's 15. he's 15 right all right so 21 is he skipping college or is he all in on sunshare he's no college he uh in fact even in high school um well he was homeschooled through eighth grade and then in high school he went to a boarding school but he only um it's called a yeshiva it's a place of religious study for jewish people and normally the curriculum is that half the day they spend with religious studies the other half in their secular studies so for him he opted out of the secular studies and was working on such sheer interesting and then when he graduated high school he actually never graduated coincidentally or interestingly he's a high school dropout um but he didn't go to college he's the co-founder and cto of such chair and spends full time on it now 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 it 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 valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're gonna get a different 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you that we have uh over 90 000 substitutes nationwide and what does that mean convert your language to our audience language what does substr mean oh sorry that's what we call the launderers okay so this is that's a heck of a name too but i just finished watching ozark when i hear a laundry or i don't think someone that does laundry i think something else but these are people that do the laundry in cities across around the globe right so this is it's a peer-to-peer marketplace so just think uber for laundry no no i understand that i'm trying to flesh out the marketplace so there's there's 90 are these all in the u.s are they global you all in the us right now okay all in the u.s any any city if i open the app here in austin texas i can use it yep we're in 400 markets nationwide we're pretty much everywhere except for farmland manhattan and san francisco interesting and okay that's interesting so why not manhattan san francisco so if you think about the business model we need our substituters to have a car because they pick up and deliver the laundry as well as do it um and then we need for them to be accessible to the customer so in manhattan not even rich people have cars you know unless uh people that are uh you know sort of middle-income people that are doing laundry for a living and same thing with downtown you know san francisco pretty much every other city nationwide is is is is accessible for our sunsters uh but that's why we're not in manhattan and san francisco and and are these 90 000 building a living on your platform full-time do they all get work every month are they sort of in and out as demand peaks or falls so it's as they wish um we have people that do it full time our top sensor makes about five thousand dollars a month okay um and what does that convert to like can you make how many loads of laundry is that i guess well it's about um i mean they get paid 75 cents per pound so i guess that's what about seven thousand pounds of laundry seven thousand pounds what's i don't even know what's the average what's the average round of laundry measure in pounds you mean the average load of laundry yeah sorry average load of laundry yeah so a typical washer dryer load is about seven or eight pounds interesting okay yes and is it i mean she she's doing it full time now a lot of our sunsters don't do it full time a lot of them do it part time yep yep yeah and everything in between they're really their own boss they can work whenever they want take whatever orders they want you know let the orders that they don't want pass if they want to go on vacation not work a day they're in control of their own schedule yep no no i think that's great how i guess how many substars have made at least a dollar on the platform like have they all done at least one load um that's an interesting question i actually don't know the answer to that question i'm sorry isn't that like a key thing in a marketplace uber knows how many drivers did at least one ride per month shouldn't you know how many of these 90 000 did at least one load in april well i know oh in it so you didn't say in april so i do know how many active such there's yeah how many active misters we had last month um about 3 000. and so i don't know in your space is that i don't know about 390 000 is that a high activation rate or low activation rate are you happy with that we're happy with it because we're not supply constrained we have plenty of sudsters unlike most marketplaces most marketplaces are supply constraints so uber needs more drivers airbnb norton it needs more hosts et cetera we're more demand constrained than supply constrained so we're we're very happy with situation on our sutster side we've got plenty of suds there's and they're doing really well and making enough money and and we're trying to really grow the demand side so i mean we shouldn't skip over that success how did you manage to go to market and sign up ninety thousand sudsters so i'll tell you it's so because such share solves a second problem which is fascinating the first problem is obvious which is people hate to do laundry um but we solve a second problem which is that unskilled workers people who don't sit behind a desk for a living people who work in factories restaurants amazon's fulfillment center they want to work from home too but they can't they don't have the skills but what they do have is an under under utilized washer and dryer and so you combine that with the sudshare app and voila you have the first ever manual labor work from home gig in the world and so at a time when uber lyft door dash instacart etc they're spending a gazillion dollars trying to recruit workers and they're losing them we're spending like nothing and they're coming in droves thousands and thousands of sensors are on boarding every single month and it's because they have this unique opportunity they've never had in their life which is to work from home how um how do you find them though right you still have to find people that have a washer dryer at home like do you sector by average household income i mean obviously i'm not going to do laundry in my house because i make money in other ways so like you still have to find out how to target them right yeah but as soon as you have something like this people talk they tell their friends their family i mean we had we had 13 000 susters on board in november and it's because we had an influence or post about this unique work from home opportunity and so um you know when you have something that's really great and unique especially in an age of social media people talk about it they post about it and it's mostly word of mouth interesting okay talk to me about the strategy it sounds like demand side's a little bit trickier here how do you solve that and how are you solving it today yeah so i mean it's we're growing enormously like i said 10 to 30 a month so it's not like you know we're not growing on the demand side the whole marketplace is growing like crazy but it's just that the demand side is a little bit slower and we are demand constrained um right now it is mostly word of mouth on the demand side is also and we do quite a bit of google ads um that drives the platform we just closed the table can you quantify that more like when you say quite a bit of google ads are you talking like tens of thousands a month or like a thousand a month or something tens of thousands tens of okay so significant more than a hundred thousand yeah oh wow okay so significant ad spend yeah yeah okay we just closed the 10 million dollar seed round and we're going to be investing a lot of that in a marketing team and in paid media spend so we're looking to expand other marketing channels for customer acquisition what um what's the team size today how many folks will time we've got about 25 um most of them are customer service so if you exclude customer service there's about eight and including your son how many engineers are there um right now including my son there are four four okay got it so yeah technical problem but you've got the the tech is there it's now just about building out the additional parts of the marketplace what's next i mean is their next product in line obviously you have two massive groups of people you can sell other things to 90 000 folks who have a laundry machine at their house and however many you have that are requesting laundry be done every month so there are lots of other possibilities but we're not really thinking about that now what we're really focused on now is much deeper penetration of the marketplace into the laundry space there's so much so much opportunity there it's so gigantic how big is i just have no i in this united states alone how big is it there's 125 million households producing 50 pounds of non-stop laundry every single week if you do the math at a dollar per pound which is what we charge it's a 300 billion dollar market in the u.s alone i see so you're taking 50 pounds times 120 million households times a dollar per load which is which i mean that's like six bill that would be like six billion per month in revenue if you had 100 market share yeah i mean you know we don't need 100 percent have a gigantic so the point is that this is a huge opportunity just in laundry but you're right i mean down the line um you know there are other possible line extensions your model is a dollar per pound so that that quote you gave me earlier of your biggest star doing 5 000 a year that that's like oh sorry 5 000 a month you're effectively just taking you're keeping only 25 of that right for yourself as revenue right well she gets paid 5 000 months so if you do ah so we can multiply times one point five thousand divided by point seventy five so she's doing about sixty six hundred pounds a month yep um she's getting five thousand which is seventy five percent and we're getting twenty five percent of that just be clear sorry uh oh yeah cause it's a dollar per pound yeah so sixty six hundred pounds you're she's making five you're getting sixteen hundred there how did you come up with the 25 cents per dollar or is that sort of like uh we're just gonna sort of we're gonna guess and figure it out later no we wanted to we actually started with what we wanted to pay the sudsters so way back when we were starting this we ourselves started to process laundry and we figured out how much time it would take to pick up wash dry fold and deliver laundry and then we calculated that we wanted the substitutes to earn uh between you know between fifteen and thirty dollars an hour they don't get paid by the hour to be clear they get paid by the pound yeah we wanted them to be earning like 15 to 30 an hour and um and so we started with we started with that like how much did we want the sunsters to earn uh and then we backed into the price for the customer from there yep interesting now you mentioned you have three thousand sort of active substitutes in last month in april right your biggest one is generating 1600 bucks in revenue for the company so your max revenue per month would be 1600 times three thousand sud surge or about four point eight million bucks which is obviously again a great business per month you're not there yet obviously that's your biggest substitute but how do you get up to that how do you break 4.8 5 10 million bucks in revenue per month it's marketing and deeper deeper market penetration i mean so it's just more ad spend is that it just more filling the buyer it's more it's more ad spend and and more time i mean we're we're growing organically 10 to 30 a month what do you mean organically though you just said you're spending hundreds of thousands on facebook and google ads per month that's not organic right so so yeah some of it's from the some of it's from the google ad span and a lot of it's organic yeah i guess the reason i'm asking this is what i'm trying to decipher here is what the mode is right if someone else listens to this podcast or there's others that do this sort of marketplace what's your special sauce or what would you say your special sauce is um so i can't point to any one thing um but this opportunity has been there for many years if you look at the history of the space there's a lot of carnage and the reason for that is because operationally this is not simple and we had to solve many problems in order for this to work and for this to be scalable as we're scaling it and so i would say that the real moat is uh you know an operational excellence and also of course at this point we have the first mover advantage we're way way way ahead of pretty much everybody else in the space you know with penetration in every market nationwide so it would be pretty difficult for somebody it would take them years to catch up um i mean there are a bunch of these for you know loopy laundry spot pos i mean i'm just reading ad results when i search laundry cleaning up right hand wrap i mean why do you i guess why do you see a first mover advantage i mean i we've done interviews with folks that have launched something like this before 2018 it's really who can market best and who can who can uniquely get both sides of the marketplace filled out yeah so just i mean if you you know if you look into loopy and dree and hamper and these other companies they're they're they're nowhere i mean they're they're incredible they've been doing this for years like we have and you know they're in uh a handful of markets would you ever look at uh keep raising additional capital keep driving revenue do a roll-up strategy these folks to accelerate your own growth not of interest right now i don't think they really have much to offer they're very very very small they're very small have very very little attraction what do you think hamper app does in terms of revenue i don't know you're pe guys i'm going i'm sure you've run all the math on this i i don't know i mean it's a private company there's there's no way for me to know i know that they're in like eight markets or something and their penetration in those markets is very minimal yeah what about what about what about like rents right i mean obviously they're sort of number one in the app store for these sorts of search terms yeah so that's a different business model um rinse is in about 17 markets and they're you know they're a substantial company but they're they're bogged down in the dry cleaning business and they also have a very capex intensive business model um which is limit i mean and they they raised like 20 25 million dollars a decade ago and they're still only in like 17 markets and again i think it's for two reasons one it's very cat intensive it'll be you know nearly impossible for them to really scale nationally like we have just educate me more i don't know what makes that capital intensive um they have their own they they have their own plants ah wow okay it's not a peer-to-peer it's not a peer-to-peer marketplace model yeah interesting okay uh very very interesting and the bigger thing is they're they're also bogged down in the dry cleaning business which is a completely different business the company that wins this space is the company that's going to focus and be great at laundry it's a totally different business interesting now did you guys raise a precedent round as well or is 10 million the first external capital n first external capital first extract got it so 10 million raised here uh 25 folks on the team four engineers where is most that money going to get spent outside of paid ads uh building the marketing and tech team okay so so to you hire more engineer i mean marketing obviously would be more ad spend but tech team more engineers the tech team is more engineers but marketing is not just more ad spend it's really building the marketing team okay so so what might that role look like are you gonna have people with like quota in terms of onboarding new substers or is this someone doing managing paid ad spend what do those roles look like yeah head of performance marketing director of retention marketing vp of marketing yep very cool and then how do you mention obviously i mean how do you measure marketplace churn right so me a homeowner requests someone does a substitute does my laundry in april then i don't do it in in may right do you look at that as turner how do you how do you measure activation uh yeah we we definitely do track uh attrition um we yeah we track attrition when you say how it's um you know just using our data well anyway i understand that but what would you consider a good attrition rate or market standard um five percent okay so if a thousand homeowners require a subs to do their laundry last month and that decreases to whatever 950 uh this month you're okay with that amount of attrition yeah i mean pretty much you know most sas companies no matter you know no matter what you do a five percent churn is pretty uh sort of a natural churn it's it's considered a strong churn rate one the sat in in the sas space five percent churn per month would not be acceptable uh you would get killed on your valuation in the marketplace that might be different okay five percent monthly churn in sas would mean you're turning over 60 of your user base annually that's unacceptable you wouldn't be able to raise any capital your growth would stall very very quickly um marketplace though i just i don't know marketplace metrics like you do five percent could be totally fine in the marketplace world yeah it would be yeah do you have expansion opportunities are you capped at 50 pounds per per month per household um well we can't do more laundry than people produce uh we're we uh we plan to expand internationally in 2023 um so that's an opportunity for growth we also want to get more into um uh commercial laundry um doing laundry for restaurants spas auto repair shops that have you know like rags and stuff so there's we we do a little bit of that business now and i think we think there's more opportunity there for them very good all right more anything else i should ask about that i skipped over no no all right let's wrap up here with the famous five number one your favorite book seven habits of highly effective people number two is their ceo you're following are studying no i don't really i don't have time for following people i'm not into social media number three what's your favorite online tool for billing sudshare for what's that for building such area like an online tool you guys use um we like slack and we use it a lot all right number four how many hours of sleep to eat every night at least eight all right and more situation we only have one kiddo but married single how many kids five kids five oh my god married with five kids and how old are you including triplets holy mackerel that's a surprise huh yeah that's incredible all right and how old are you mort i'm 57. last question something you wish you knew when you were 20. something lay wish what something you wish you knew when you were 20. oh the value and importance of relationships guys he's consistent seven times a highly effective people value relationships i sense a theme sudshare.com launched by his son back when he was 15 and 2018 sun now 20 skipped the last part of high school skipped college he's now helping run the business as well 10 million seed round just raised but more importantly they're giving access to over call it thirty thousand ninety thousand folks that own washer dryers at their home and ability to make money from home the ultimate work from home gig 3 000 of those 90 000 are actively doing laundry last month in april their largest they call them sudster did about 666 pounds of laundry last month earning about five thousand dollars for him or herself the company keeps about 25 percent of that as they look to scale with their uh three over again three thousand substitutes on the platform send scaling quickly more thanks for taking us to the top thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally 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