How Sunroof CEO Travis Tillotson grew Sunroof to $350K revenue and 3 customers in 2024.

hey folks my guest today is travis tillerson he is building a tool called sunroof.us he's a louisiana native tulane grad mit ocw then new york city where he founded his last tech company in 2011 from a closet truly a closet and grew to 10 million bucks in sales before exiting we're going to jump into all of it today travis you ready to take us to the top i am indeed all right tell us about that first company when did you launch that business what year uh launched in 2011 and that was that they was actual launch or first line of code or llc filing or what that's llc filing nice nice and and so you built that for how many years uh actually since up until 2019 we exited in november um raised uh 10 million dollars of capital throughout that process our first uh you know big round of capital was 2015 in 2018 and from there we achieved a few accolades like number 290 fastest growing companies number three best place to work crain's magazine that fastest growing companies was inc magazine 2018 and what was what was revenue that year in 2018 uh six six up from what um you know that was some 2017 2018 numbers um i would say uh we our growth rate was was high it was it was a you can look it up in the magazine i guess but you don't want to come on that's not something you remember you don't remember you were in the magazine oh no i'm saying we were like at like two uh the product yeah we're attacking hedge funds and private equity firms uh that was our like explosive growth vertical they're willing to pay very quickly and um you know really pay a lot for research disrupting the sell side using alternative data and how did you how did you get that thing off the ground were you sole founder did you bring in co-founders so i was sold founder initially and basically i started selling to the enterprise and at the long and short of it is selling the enterprise for several years had issues with um standard consultants dilemma of selling kind of all data at the time so reporting to you know various uh enterprise organizations on the advertising metrics across the country and if you gave them bad news wouldn't necessarily be rehired it was almost say consult that consulting s model and turned into a software model and then um you know basically brought in people who were experts in the you know financial sphere um to be partners and we ended up selling our research and data and getting paid for it um no matter what the outcome was so we weren't being paid just to paint rosy pictures we're also being paid to just because i wanna i wanna focus on sun roof so so i'm just trying to get the equity story of sergio right so so when you guys sold i guess how much equity did you still own um i sold the equity that i had owned was 33 okay would you so would you do the same thing like you raised some capital you brought some co-founders is there anything you change about how you manage the cap table there um i think that uh i've learned a lot of things in the past and i will say that um make sure you find the right partners like i want to make sure that i find the right financing partners i want to make sure that ultimately um you know you work with people that you like to work with and ensure good and clear communication i mean from my perspective um you know it was really just a lot of lessons learned from a real first time founder so it's standard lessons you guys probably talk about every day and or every week of founders who've been through an exit raise capital um you know so yeah i would treat it as don't don't go after those lofty valuations um a little you know too early just because people are willing to give them to you because then you your expectations are much higher afterwards so what was your valuation in 2018 when you raised the 7 million valuation was 30. and did that feel fair at the time did that bite you in the butt or was that fair and then good uh i would say it um i would say that from an expect it just is all about setting expectations and you know recognizing that if you're taking these dollars uh i fully you know expected that we could achieve and accomplish our goals but i also you know there's a a balance of i guess you could say hedging appropriately so understanding like okay does this mean that we're raising capital forever and we're going to be you know our goal now is to get to 300 million let's just assume the 10x 10x rule so are we gonna need three more financing rounds to get there are we gonna be able to do it with this financing round ideally um you know i think you can build very strong healthy software businesses uh without requiring capital once you get over that real hurdle you get to that like magic mark from that 10 million to 50 million number which we were not able to um achieve 10 10 million to 50 million are and you know that really is kind of a goal is ensuring that um you know getting a sticky market and it makes sure you have true product market fit and reducing churn stand yeah standard point standard playbook all right just to put a bow on that story before we go into sun roof so so you grew it caught past 6 million bucks in revenue you raised about 9 10 million bucks in capital and you sold it you said last year or 2019 a couple years ago so it's been basically two years two years okay okay so november november 19 like the office the staff went to the requires office in november of 2019 so then transitionary period and you know from there it was in their hands where it's kind of like take a step back and see how it goes and and what was the exit price that's something i can't really share because we still have components that are moving in place um so we did have a fixed number but um you know depending on how that how that uh fares out over this period of time i'll let i'll let it speak to upon completion yeah yeah so so if i'm reading you right basically there was a component of it that wasn't like cash up front there's gonna be an urn out maybe some stock involved you're not quite sure what that's going to end up being value-wise precisely and covenanted covet code was an interesting little cup that was not anticipated necessarily yeah the reason i ask just again to finish off that story is because you raise 70 on the 30 right so if you sold for less than the 30 million evaluation many people would go as effectively a down round when you exited would you agree if it was a down round to be exited i mean basically with all the factors in play um you know since we given the amount of capital that we raised it was the best decision for the company at the time best decision for all the shareholders uh unanimous board consent uh to move forward what we had and that was that was the best opportunity for us it wasn't the uh headline headline exit that we necessarily you know wanted and or anticipated but it was what we you know what we did so it's something that kind of you know i think it's a lessons learned story from the perspective of exciting you know rapid growth uh but certainly want to make sure that how we account for things moving forward and how i do things moving forward um is done in a way that takes those lessons learned so getting to an exit working with the right investment bank making sure that everything is you know done properly on the roadshow i can't imagine telling investing in a first-time founder having never gone through uh kind of a road joe experience and just trying to like you know wheel and deal that's kind of you know it's something that was new to me and i was able to do it but i certainly think it could always you could always room for improvement i guess with everything right so yep okay so you close out that chapter of your life now did you make like you know fu sort of money on that deal or like was it just enough money to have a little in savings or what like no cert not fu okay that's why basically you know there's a there's a balance because we were really like and exciting we had a whole floor and a bunch of great staff honestly great product great technology great client list like um we're talking like top investors in the world or our clients and you know sky's the limit that said um you know one thing that was our end market uh you know did did have some difficulties so just as quickly as they're willing to shell out money they're also willing to um you know move on to what's what's hot what's not and i think that that's an an interesting dilemma that's very specific to that market because once you get it's the opposite of software once you get you know 25 large holders buying your data and insights basically there are they all don't have they have diminishing returns they can start to lose alpha so they lose the edge the more the more you sell to the more edge they lose because then everyone else has the same data so hey listen we have about five six minutes left let's show folks on sunroof now so you're selling now to banks helping them service loans faster what do they pay like what's your model they pay you like a percent of loans completed a sas fee what's it look like basically customer orchestration from the customer experience component to the employee experience components and then the ori component the online reputation management combine so we're looking at a market that really is crushing it right now meaning the lending market in space let's say mortgages uh lending and you know not b2b loans it's consumer loans mortgages things yeah and there's a b2b component so we've tested different verticals but what's your main one right now is it helping bank service home mortgages yes okay and uh basically right now what we're doing is really trying to make sure that we take this next step to um propel us to get to 50 customers 100 customers really really make sure we make all these decisions so we are actually solving all the problems that we know we can't solve but solving the right problems but there's not just a bunch of vc money being thrown in and you're you're bootstrapped right now yes bootstrap so i i've self-funded it for the past um well come on how much of your asses on the line how much of your own money have you put in a good amount i would say a good morning more than a quarter million um you could say yeah i mean you know yeah i'm looking at not a okay not like a fun amount like okay so it's more than 250 grand i won't push harder but more than 250. yeah you could say okay fair so you're putting your own money but you hopefully own about 100 of the business right yeah yeah i mean yeah so no co-founders no investors right and basically we are you know right now looking at an instrument that didn't even exist a safe note didn't even exist when i found out my last company um safe no financing um you know people who were you know aware and or invested me before um were interested and or involved and then looking at you know accomplishing certain core metrics and goals uh and basically over the next like three to six months and then from there you know really already starting that series a pipeline to make sure that we're properly capitalized but with the right vision and the right you know team members in place so i've got um you know kick-ass team uh across how many how many are on the team so we have an advisory board who's like inactive kind of role member just how many full-time employees though full-time we have five five okay cool and how many engineers three three okay so i mean happy engineering and are you an engineer are you doing all the business sales marketing i'm more doing the business sales marketing i do understand and can do engineering i just can't get stuck to that i'm not an expert and i don't want to keep up with all of it so yeah i understand how the components work understand you know what we're doing but not enough to to say that i'm going to be innovating something beyond on the front facing left more of the front end than the back end you know so so i'm a bank i'm using you i'm loving you let's say last month i i landed a new million dollar loan to a resident here in austin texas and i'm using you to make sure that that customer's really really happy how much are you making on that million dollar loan so we're are we're not structured to make a percentage of loans so we're structured as a subscription model and those that's one of the components that we're actually really trying to pin down because we are able to drive a high price given what we're actually doing because it is very fragmented markets how high like what's the average customer paying you per month would you say uh the range could be from let's call it 4 000 to twelve thousand dollars a month and what do you why would someone pay 12 versus four like what are you upselling against oh there's customer experience then there's employee experience and then there's rm so essentially we're looking at first party data for the customer experience and employee experience so we're looking at survey data analytics uh on performance you know metrics that actually are inside the organization and then we're looking at the orm component how it impacts the actual journey at the end so encouraging users to you know discuss and talk about reviews and such and that's something that um you know so you're upselling based off these products they can buy one product two products or three products and if they buy three they're paying 12 grand a month probably yes in its current uh in its current state and that's assuming that we don't make any price modifications well if you will exactly so right now i will say like i can definitively say that price modifications could always be considered when we're attacking the market in mass and how many how many customers you have on the platform today three customers three customers and you think you get to 50 in the next year you said so it depends on if we're willing to sell independently one of the components or if we require two to be purchased to um engage and that's the decision we're making it's kind of the you know leadership and such because do we really want to have all of the onboarding we want to take on those costs and sort of those costs of integration for just a one one step or one tier to be able to pay that's something that's currently being actively discussed under engaged so travis three customers minimum price points four grand a month that means at a minimum you're doing about 12 grand a month right now in mrr is that accurate yes okay and so why go out and raise a safe you have some money why not keep you know self-funding and keep 100 well ultimately i want to so the market's just sitting there for the taking and you know one thing that i will say is that if you're always raising capital it is a big distraction and doing a safe allows us to hire the right team and attack the market and get market share in a very like position of comfort right now i would say our customers aren't getting the enough uh we're not collecting enough feedback from our customers to make the true blue product decisions we need to be making that we need to be hearing we need to be listening to because we don't even have real uh you know a ton of managers we don't even have managers like full-time managing these customers so it's like so what's the right amount how much are you trying to raise right now uh the right amount's small so we are talking like very low like million million bucks and how do you obviously it's a negotiation it's very much art not science but what cap would you love to raise at um i would say we basically are using two component val cap uh and discounts so eight and then the discount rate that we're providing and are offering its current form so you know it's reasonable because then we feel that no matter what the investors are really aligned what's the valuation i mean that safe discount is pretty typical 20 and the interest rate is pretty typical at 8 percent the cap is really what matters i mean so are you doing like a 5 million cap or something different no no 8 million 8 million cap okay got it with and then these are pretty standard terms so do you think i mean it's really your storytelling it relates relatively standard you know it also allows the flexibility of not having common and preferred which is something that you know haven't done in the past that is something that's highly relevant to me it's like nice to have everybody be fully aligned um and not have some people of interest that may not necessarily align because my interests always align with just making the company the most valuable as possible of course yep and you're you just remind us too you really got this going last year right you launched in 2020 yeah yeah very cool we're rooting for you we hope get the deal done you get up to 50 customers here quickly in the meantime though let's wrap up with the famous five number one favorite business book favorite business book oh the famous five i don't know the famous five i would say uh principles ray dalio number two is there a ceo you're following or studying um i say elon musk is always standard uh ceo like to see what he's doing interesting number three what's your favorite online tool for building sunroof um i would have to say air table nope number four how many hours of sleep to get every night four and situation married single kiddos single no kids running around no kids no no no uh but i do have a partner but nothing uh nothing nothing we're not you know engaged yet and how and and how are you travis uh how old is it how old are you yeah yeah 37 37 last question something you wishing you when you were 20 wish i knew when i was 20 yep um i wish i knew um i guess how i would uh i guess it would be able to predict the future a little bit a little bit better and basically understand how um how metrics worked i think that if i really had a better feel for metrics and not just growth i think it would have made some decisions a little differently guys he owned 33 of his last company when they sold that in 2019 he launched that in 2011 raised about 10 million bucks grew it to well over six million dollars in revenue before exiting used a little bit of that money to put it into this new company sunroof.us it's really helping banks manage loans more effectively both the bank employees and the customer who took the loan helps with the entire customer experience he helps to continue to scaling currently doing uh helping three customers at about four grand a month each show 12 grand a month in mrrs he looks to scale up to 50 here in the next 12 months or so currently raising a million bucks on an eight cap on a safe we will see what happens travis thanks for taking us to the top thanks nathan 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 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