TABS Suite Revenue (2024)

[00:00] What is going on YouTube? You know, we are just two weeks away from Founder500 in Austin, Texas on September first and second. There's over 500 B2B SaaS founders all coming together. You don't want to miss it. Ticket prices increase every three days. I have it on an automatic accelerator every three days, and we're almost sold out. You can see there's about nine left when you go to the event bright link, about nine left, and it's updating [00:23] real time. So check it out today. It's founderpath.com. Then in the upper left, you can hover over our product dropdown and click the event stream. I'll also put it in the description here of the YouTube video. I'd love to see you there. Hey folks, my guest today is Unaud Bakk. He's a four times non technical SaaS founder who's amassed an incredible amount of experience in building, investing, and growth hacking early stage SaaS ventures. Got his fingers [00:43] into the model, angel investing, advising startups, and mentoring founders through unique reverse angel method. He's on the board of many companies, and most recently, he's built tabsscore.com, diligence as a service, and he's got some big news to share. Unnat, you ready to take us to the top? Sure. Alright. Let's not bury the lead. What's the news? [01:01] >> Alright. So, pre IPO corporation, is a firm that is doing private and secondary market securities. And, you know, as they were expanding and and raising their round, they found it pertinent to acquire a technology suite, which was tabsscore. So adding our proprietary AI and ML, you know, intelligence as a service on these late stage companies, but also as they focus down in the mid cap and growth stage, being able to perform the diligence suite functions, you [01:28] >> know, and just enhance the tech suite of their offering overall. [01:32] Yep. Yep. I love that. Well, look, we are, we're obviously super excited for you. Tell us more about, tabsscore, so pre pre IPO. Right? So what kinds of stuff were you working on? Or sorry. Not pre IPO, but, like, pre the acquisition to the company called pre IPO. Right? So who what would someone have paid you for, you know, four months ago? [01:51] >> Yeah. I mean, we had everything from, everyone from angel investors, single angel investors, all the way to angel funds, the way up to micro VCs, big VCs. We even had SBA lenders, government organizations, and their core crux was utilizing tabsscore to essentially conduct an evaluation on an early stage or a growth stage company. And what that means really is, you know, not like the traditional scraping style tools that just provide it, you know, hey. This company [02:17] >> has 10 followers. They're not a good company. That's what we wanted to avoid. So tabsscore allowed, these investors to perform quantitative analysis on the qualitative aspects of the business. So being able to assign quantitative metrics to founder experience or, you know, where they are in the life cycle, whether they're b to b or b to c, and whether they've explored those paths. Being able to put quantitative metrics for that, but then also able to spit out [02:43] >> these dynamic reports, in lieu of investment memos, to not replace the diligence process, but just augment the amount of information being provided to the team in a fraction of the time and cost. [02:53] And so was that if people wanted that diligence, was it one off, or do you guys have a SaaS model? [02:57] >> It's a SaaS model, similar to how it's it's how some of the companies like Zapier are doing, like, zaps or 20,000 zaps. So same way we did tabs tokens. So different types of assessments, quote, unquote, assessments could be created, in terms of the user going on, the investor going on and creating, like, hey. We wanna learn about financial fundraising, product market fit. We want a data room, but we don't care about x y z. So it [03:24] >> created a custom token cost for, that assessment. They could actually turn that into a button and then put that on their website or an email drip, and then using Zapier, set triggers to send that off at any point during their process. So as a SaaS model, it ranged anywhere from $500 a month all the way up to sometimes 75 k a year or more. [03:42] What what would you say? So $500 a month to what would that be? 4, $6,000 a month. That's a big range. What would you like the average customer is paying? Like, a grand a month, something like that? [03:51] >> Yeah. I would probably say we we had a lot of, like, 500 to a thousand dollar, and then what they would do is go in. And then if they utilized all their tokens, they would just purchase a la carte or just automatically bumped up to another tier. [04:03] And when did you guys write the first line of code for tabsscore suite? When did you launch? [04:07] >> We launched official so first, I I was doing the schema diagramming while I was on the last legs of the previous business as it all works with serial entrepreneurs. But then the first kind of deployed launch was January 2020. [04:21] When did you start the schema, though? [04:24] >> October, 2019. So it took a couple months of it was a very crude you know, we look back on it. Actually, we have a funny, like, progression model of how the first one we had to buy, it's actually sitting oh, you can't see from there, but it's sitting over there. It's a computer that we just had to run the Excel macro that would put provide the report, and it would take an hour, and we couldn't breathe [04:44] >> near it because it would crash. [04:47] 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 [05:10] 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 [05:35] 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 [05:56] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder 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 [06:22] 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 [06:44] 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 [07:10] interview. Okay. So so that you get going in 2019, and how long did it take you to get your first customer? [07:17] >> Our first customer was March 2020. So it took, right after actually, during COVID, one of the investors was like, I'm not able to conduct diligence. You know, I I know I turned down the tool earlier. Can I utilize it as a trial? And, you know, we gave him one, and it was super manual on the underside, and then we're like, this is not sustainable. That's where we started to build out the ML tool. But he was, [07:40] >> yeah, it was one of the first customers was a thousand dollars processed as a check handed over a restaurant table. [07:46] That's amazing. Alright. And so how many customers did you scale to before the acquisition? [07:51] >> So whenever even potential users or investors ask us that question, the the way that we turned that around was we have some that, you know, ran incubator accelerator programs for thousands of assessments. We had some that use it on a per deal basis. So in terms of users or customers, that wasn't the best metric to look at it by. I would say that we had over 1,000,000 lines of iterated code written by the ML and AI [08:15] >> system. That's how much the platform was used. Even today, the SBA company that uses it or the SBA lender, from the state of Colorado, we still have passively, after they've turned off all their funnels, are still dripping through three or four a day. That's just that one person. [08:30] Yeah. Sorry. But, I mean, look, I understand the metric you're giving me, but my audience is gonna hear that and roll their eyes. So let me try and help you, like, save a little face here. I get how you're trying to describe it, but let me ask a different question. Might be easier to answer. How many folks spent at least a dollar on the platform over the past the prior twelve months before the acquisition? [08:45] >> Let's say about 70. [08:46] Okay. There you go. Yeah. That's a much better metric. And you obviously have power users. [08:49] >> This is a very high touch SaaS product where it requires, you know, multiple demos and to a point where it's enterprise, to a certain degree, even at the $500 level. You know? So we introduced certain tiers of pricing that were always changing. I I mean, I you know, percentage of AUM. I mean, we experimented with a lot of different stuff. [09:08] Wait. Give me some other example. Percentage of AUM, you ended up on the cookies. You ended up on the on the token basis, right, credits. But what was the other things you test? [09:15] >> So, you know, it's different when you get on the phone and the guy's like, alright. Well, we have 500,000,000. We wanna deploy it and and automatically, it's like, alright. Well, $500 a month doesn't really, you know, cut it for you. So we we tried percentage of AUM. We tried, percentage of the amount you've funded into the deals even though your fund hasn't closed yet. We tried SaaS pricing where it was just, one fee, and then it [09:39] >> was, like, blocks of, you know, assessments. We tried a per assessment basis. And then we tried actually opening it up to founders. That didn't work well, so we went back to b two b, and then we went ultra high, like b two b to e, I would say, or b two e to b, enterprise to business. [09:55] Uh-huh. Super interesting. Okay. So you go from nothing to 70 customers over the past, call it, two and half, three years. If they're paying on average, you know, call it a grand a month. Right? It's fair to say you guys are flirting with a million dollar run rate or about $70,000 a month in revenue? [10:08] >> Right. Yeah. We had it wasn't recurring, but that's where we were, you know, like, heading towards rapidly because we also had the growth in consulting side, which came up as an interesting piece because a lot of times when the when the assessments were created and the assessment is pointing out, okay, the company needs firms or help here and here, we would be contacted by firms being like, hey. You know, we have this package of, like, legal [10:32] >> needs, for example. And then you've got these companies that are saying, okay. We need the following. Like, let's match us together. Mhmm. So the consulting revenue became almost 30 to $50,000 per ticket, from there. So Interesting. [10:45] Yeah. So so I guess if we look at, like, the last full year then, like, 2021, what was, like, what was the breakdown? You think 40% was consulting, 40% was, like, per assessment or SaaS recurring based somehow? [10:57] >> Yeah. Some of our large SaaS customers, like, for example, we had three or four SaaS agreements signed at, 30 to $50,000 mark. Yeah. And those were [11:06] Per month or year? [11:07] >> Deployed, per year. But those were deployed custom silos. And then each one of those, for example, like, the the SBA one while we're on the topic was saying, okay. Now that we've deployed our silo, we wanna bring on 14 others or 10 others or whatever the number was underneath at that same $30,000 a year. So the pipeline and run rate became astronomical, like, just from them becoming it was almost like a hub and spoke model. [11:32] Yeah. Yeah. But, I mean, did you do more than a million revenue and combined revenue last year? [11:36] >> No. We didn't. [11:37] Okay. I guess the reason I'm asking this is [11:39] >> Yeah. Sorry. The exit what? Our exit, valuation accounted for us putting a pause essentially on going and closing that additional pipeline. So we actually sold based on the metric of, hey. You know, there's minimal revenue here. Let's take this. Give us the resources. We'll, you know, build an enhanced tech suite, but then we'll still go and attack those. So now we're turning those funnels back on. [12:01] I see. I see. I see. Okay. That makes sense. And and you say we. How many folks from the team? [12:06] >> We had about seven people. I say about because you always have, you know, a couple contractors that are now closest family Yeah. That were, like, basically full time. So it was about [12:15] Who did all your engineering? You're a business founder. [12:18] >> I am a business founder. No, technical ex I shouldn't say no technical experience. All our engineering was done by the same team that worked with me on the last business and the one before that. We grew that. So those contractors are are what I would call essentially part of the team, but not legally, you know, like, literally part of the team. [12:36] Were they part of, like, an outsourced dev shop that you worked with over and over? Are there individual folks you found on Fiverr, Upwork, Toptal, other places? [12:41] >> Yeah. It was it was a team overseas that we basically kind of have taken ownership of in terms of hiring processes and and implemented almost like to make them our own. [12:52] But legally But you don't you don't let other founders or other people pay to put projects through that team? [12:57] >> We actually have started doing that just because the the size and strength of that team is so great that we it doesn't make sense to not you know, I'm always, approached by founders saying, hey. Like, can you help me with product or things like that? And interestingly enough, something that came of the tabs whole, like, two year, two and a half year journey was that I turned into our head of product. So I learned Figma inside [13:19] >> out. I learned, you know, all the different tick tips and tricks, and then we worked it on a model where I would design and iterate. They would build overnight. I'd wake up and work on the suggestions while they worked on my from the previous day, and it became, like, a really cool cycle. [13:33] Yep. Yep. No. That makes a ton of sense. And so are they sticking with the company now post post acquisition? [13:39] >> They are. Part of the acquisition deal was that we usurp the tech talent or the top tier talent into the new firm. [13:45] Interesting. And how many outsource developers are there? [13:48] >> Seven. [13:49] Oh, Seven. Six total. Okay. Very cool. And what which country are they? You said India? [13:53] >> Yep. They're based in India, between India and Singapore. [13:56] Very, very cool. Alright. Let's talk about the deal. You know, there's a lot of companies building great business here. Right? You look at PitchBook, you look at CB Insights, obviously, Mattermark didn't work out for a variety of reasons. They probably raised too much, but like how do you know you didn't first off, were you bootstrapped? Yes or no. I think you were. Right? [14:10] >> Yeah. We were bootstrapped. [14:11] >> It was a little bit [14:12] >> of a difficult, like, answer because it was a gray area. We were essentially funded. I was the entrepreneur in residence for a fund, and then I essentially built the product under them using 500 k from them, but it was still, like, bootstrapped to the point where I had to essentially you know, that came out of the basis points. [14:30] Well, how much what? Did you did you own more or less than 70% of equity in the business? [14:33] >> I did. I own more than it. [14:34] Yeah. Okay. Got it. And then they own whatever, ten, fifteen, 20%? [14:38] >> Correct. [14:38] Okay. Okay. Okay. I guess so why would they let this go? Why wouldn't they try them? I mean, if it's really working well, it's proprietary. Why'd they let it why would they let it go? [14:47] >> So it's a good question. It's one that we've been asked, you know, asked a lot. And, again, let me just clarify on the last point. Like, I as part of that parent organization, like, they own a 100%. My shares or my structure ownership in tabs was through that. The reason that we [15:05] Oh, wait. What does that mean? So so we we hear model all the time where this sort of happens where you don't actually own 78% of the business, but on an exit, you own 78 or 80% of the profits with the upside. Is that how it's structured? Yep. [15:14] >> So because I was an entrepreneur in residence, my contract is with that fund. But I you know, building it out, my time became more and more focused on this and less on their portfolio companies. [15:23] I see. [15:24] >> You know? So and and I'm glad that you were able to clarify that. You know, that's a good cohesive method to explain it. [15:29] Yeah. Know. That makes good sense. [15:30] >> To answer your question about why did we let it go, we actually didn't I don't consider it being let go. In effect, we realized 10 to 12, x on, you know, initial capitalization, but that is only on direct cost, not actually IP time and, the actual time spent, you know, from the founders, which that's a an age old battle between VCs and and founders is, you know, how do you quantify that? But in terms of the [15:56] >> the equity received as part of the cash plus stock compensation, the equity received is, of us based on what we're building in our road map and everything like we talked about, like pipelines that we had frozen that we're gonna reactivate, the valuation, and the percentage we own actually and the deal terms make it worthwhile to the number that we had kind of hoped. And we're we look at this as, as the [16:21] other Let's put that, like, in one. That was a lot of, like, sure. That's hard to follow. [16:27] Did you guys sell for a 10 to 15 x multiple on trailing twelve months revenue? [16:32] >> No. So we what I was saying is, like, because we spent, like, roughly 500 to, you know, north of 500 k on physical, like, payments to either vendors, subscriptions, those actual capitalized costs. The cash portion of the deal, you know, was roughly, like, the 10 to 12% range. I mean, sorry. I see. X range of that. But the remainder of the deal, terms were taken as equity in pre IPO in in the surviving form. And that [16:59] >> percentage that we got of pre IPO based on what we know about the road map and where we're headed with that, it is it makes up for the difference in where we want it to be in terms of our vision for tabs. [17:11] Well, even if it's just cash, though, I mean, and you did less than a million bucks in revenue trailing twelve months, a million, right, times even six x would be great right now. Right? It's a $6,000,000 deal. But if you got a deal that's 10 x the cash, you can have 5 100 k. That's implying a $5,000,000 cash component of a deal, which I would consider a fantastic deal by itself. [17:27] >> Yeah. I mean, you know, you're a numbers guy, especially when with the whole Founderpath thing and you look at those ratios. I mean, it it was a great deal. [17:34] How'd you con that's crazy, actually. I mean, considering you're not even pure SaaS, how'd you convince someone to pay a you know, more than 5,000,000 total deal price, but 5,000,000 cash for business doing less than 1,000,000 in revenue? [17:44] >> So one of the key, parts of the diligence was actually it was a part of an acquihire. Right? They really wanted us and the team as part of it. The other piece was they went and spoke to our SaaS enterprise customers. You know, it's one thing to say, oh, this is our pipeline, but it's another thing to talk to them. And those people to be like, yeah. We're just tell us when to go, and we're gonna [18:03] >> bring on, you know, everyone else. So in a way, was like, okay. We're gonna use this. The actual value of the IP as well based on their conversations with their large enterprise customers, I mean, the dollar amounts attached to what they were selling based on the usage of our tech was where they we kind of came to that of Oh, this price was public. [18:22] This price was in the press. $20,800,000 deal price. $20,800,000. [18:26] >> Well, that was, yeah, the initial price. The final price got, you know, that was the MOU pricing, but then we adjusted slightly to reach, like, terms more favorable to both parties. [18:36] So was the total deal price lower than 20 point 8 or higher than 20.8 after we're good? [18:39] >> Slightly lower than 20.8. [18:40] Fair enough. But 5,000,000 of it was cash. The rest stock, equity, whatever, more upside, earn outs, things like that. Makes good sense. Interesting. Okay. Well, we'll see what happens now. Was pre IPO bootstrapped or have they raised a bunch of money? [18:51] >> So pre IPO is not bootstrapped. It was for a little bit, but they've, they're about halfway through an 8,750,000 seed round if I'm not mistaken. They're closing another 25 mil, shortly after that, and then there's a credit facility on the line for, you know, not closed yet, but there's a several $100,000,000 credit facility to actually buy shares in in the pre IPO companies from SEC. [19:13] Yeah. And they're playing sort of in the crypto world too. Just to be clear, when you say there was a $5,000,000 cash component of this, this wasn't like some exchange for ETH or some crazy inflated coin on Coinbase that you can't actually get liquidity. This was 5,000,000 USD fiat wired to you plus the fund that you're an EIR in, plus any other one that owned equity in the business? [19:31] >> There's still a cash, component like earn out that is, you know, during the purchase period or immediately following, but I see. It's in US dollar. It's not in some crypto coin. [19:40] I see. Okay. So the total deal value was, call it, a little less than $20,000,000, of which 5,000,000 was cash. However, all not all that cash was paid upfront. Some portion is on whatever a two year earn out. Correct. I see. Okay. Very cool. Heck of a story here. I guess, last thing I'll talk about, were you guys profitable before you exited? [19:59] >> Yeah. We were breakeven. [20:00] Okay. Breakeven. Pretty good. Pretty good. Very cool. Well, hey. Let's wrap up here with the famous five. Number one, favorite business book. [20:07] >> Business book, Hard Things About Hard Things, Ben Horowitz. [20:10] >> Yeah. [20:11] Number two, is there a CEO you're following or studying? [20:14] >> There is actually. There are quite a few. I couldn't name one right off the top of my head. Number [20:20] that's okay. [20:21] Number three, what's your favorite online tool for building a business? [20:25] >> It's gotta be Figma. I I don't what it is. [20:28] >> Yeah. [20:29] Number four, how many hours of sleep do get every night? [20:31] >> I actually get eight to nine. I I cannot function without it. [20:34] And what's your situation? [20:36] Married, single, kids? [20:38] >> Be married in March. [20:39] Oh, congrats. No kids yet? [20:41] >> No kids yet. [20:42] Oh, they're all Alright. [20:43] Little little UI UX [20:44] >> designers are gonna pop out. [20:46] How old are you? [20:47] >> I'm 28. [20:48] 28. Last question. Something you wish you knew when you were 20. [20:52] >> I wish I knew that there were founders willing to help out us building companies, as first time founders. [20:59] Guys, there you have it. He learned by building his company as an EIR and out of fund. They gave him $500 k cash and said spin this out and build it. It was called tabsscore, machine learning and AI and Sorry, due diligence using machine learning and AI. Grew it to, you know, something between 500 ks and a million bucks of revenue combined SaaS and consulting fees, and then sold just recently for $20,000,000 deal value to pre [21:21] IPO, which 5,000,000 of that was a cash component. Now he's building this inside of pre IPO and hopes to continue to scale it rapidly with his team of seven. Unnat, thanks for taking us to the top. Thanks. [21:33] 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 [21:59] 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 [22:21] 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 [22:43] 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 [23:02] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.