Trust & Will Revenue, Valuation & Funding (2024)

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is cody barbo he is building a company called trust and will think about it almost like online estate planning made super simple we'll jump into it cody ready to take us to the top let's rock it all right man so talk to us a little bit about the company so first off is this a pure place sas models or like a marketplace it's it's a hybrid we have an upfront fee that we charge for our three products and then there's an ongoing annual subscription because estate planning is a lifetime of updates it's not you set it up once you're done with it you have kids you buy a home you build your wealth you have an inheritance you have liquidity we want to encourage people and use technology to update their estate plans throughout their lifetime so that's where the subscription comes in is this just for rich people no no i would say that the misconception of estate planning is that people assume that it's for the wealthy in fact the most important reasons to set up an estate plan is if you own property you have assets worth protecting or if you're a parent you can appoint guardians for your children you can protect your home and your assets with a trust avoiding probate court which can cost a lot of time and money an emotional toll especially if you've lost a family member so really it's built for the everyday family in this country out of curiosity can i give an example of my dad here in a second what's the average age of a parent or person that is paying you guys using you yeah so majority about 70 of our members are going to fall within the kind of 25 to 50 range and have minor children it doesn't discount the fact that 30 percent of our members are 55 plus but our core focus is really people that are starting families buying their home building their wealth and going on this journey okay yeah i was going to i was going to ask i just went through some of my dad who's 83 and i mean he like can't he can barely type his thumbs are too big he doesn't even understand like a keyboard text and i'm trying to say dad call a freaking lawyer and get this stuff done and he's like handwriting stuff out it would be a nightmare for me to try and get him to use this even though he desperately needs it yeah 40 of boomers have no form of estate plan which is honestly a crisis you think of people our age that are now entering the kind of caregiver role taking care of our aging parents or grandparents and it's incredibly important to have these documents set up to make it easier for a transition when and if the time eventually comes so for hopefully our parents not for a long time but it is a reality that we have to face at some point yep so okay paint the picture here let's let's go to your core cohere 70 between 25 and 50. someone listening around 30 years old they want to use you on average what are they going to pay on the upfront fee and what are they going to pay on the annual subscription yeah so we try to price our products as affordable as we can we have three products in the market we have guardian for the first time parent which is 39 for an individual 49 for a couple 10 bucks a year we have our will package which is 69 for an individual 129 for a couple it's an ongoing fee of 20 to 30 a year depending on which product sorry that was 69 69 for an individual will and 129 for a couple and then we have our trust package which is 399 and 4.99 with a 50 a year ongoing subscription so really it's for that mate 399 set up correct got it so someone's going to use all guardian will and trust products it's going to be kind of 40 per month plus 70 per month plus four sorry uh uh 40 to set up 70 to set up 400 to set up and then something like you know 30 to 60 dollars per year yeah yeah it's like 10 years yeah because it's kind of crazy like an estate plan if you go to an attorney you're gonna spend anywhere from two to five thousand dollars to set this up just to make a simple update like you had another kid you bought a new property you moved states it might cost you a thousand two thousand dollars so just having that nominal annual subscription allows us to kind of keep that maintenance and relationship with our members so that as they go through life these life events happen i'm living proof of it i got married having a kid this year and then we'll be buying home it's like it's logical to go set up and update these documents but not have to cost you an arm and a leg to do so you're the perfect founder for this company so um before before i get more the backstory or the journey to this point give me a sweet spot here so it sounds like people ignore the setup fees for a second is it fair to say maybe the average is a person paying you something like 40 50 bucks a year yeah about so yeah if you average it across the products okay fair enough and and is there are there any power laws across the products in other words one one of these products makes it more than 80 of the revenue yeah the trust makes up a considerable amount of our revenue considering that our base products the guardian is at 50 and our trust product is at 500 it is a 10x jump to the trust i think with estate planning most attorneys want you to set up a trust it is the best option if you want to protect your assets avoid probate and avoid those fees that are associated with it but for the first time parent who maybe doesn't own any homes i think of like the younger millennial parent like mid to late 20s who just had their first kid doesn't own any home or any property or assets the peace of mind of knowing that your kids are protected is the single most important thing that we're trying to hit on which is why 45 million parents with minor kids in this country don't have any estate plan let's start them with the guardian product and then work them up towards a will package or trust package when the time is right never forcing them into something that they're not quite ready for yeah put this stuff on a timeline for me when did you launch the company we started talking about this august of 17 we entered a pitch competition that we took third place on at qualcom's headquarters which was like a forcing function to incorporate because we had tech stars approaches angel investors approach us we incorporated in october of 17. we went through tech stars in 2018 we raised our seed round uh that we announced in january of last year of 2 million we announced our series a last month of 6 million we've done some pretty cool stuff we're live nationwide we've had about 65 000 people sign up for trust and well for one of those three products we did the first one or is that free and paid free and paid free and paid we work with partners on financial services insurance couple other categories so we can discount the products or do revenue shares with those partners and then we have our kind of history defining milestone was last year in january we did the first electronic will in history us history which means digital signature digital notary digital storage of documents it is the future of not only every industry but it is estate planning it's just unfortunately the last industry to adopt modern tech so just be clear that was the first digital will or trust digital well digital digital will interesting yep okay so uh let's get more the early days here the first couple of months so um forcing function was the qualcomm event it sounds like you incorporated october of 20 of 2017. um how how long were you writing code before your first dollar of revenue do you remember yeah we launched our first product which was the will just a basic last will and testament in the states of california texas in april of 2018 that's when we finished techstars that was like our coming out party we were like hey we finished the text stars accelerator we launched our will in california texas to the biggest states and that's when our first paid customer came through because the first 200 were friends in the network that had kids their own property that we gave them a lot of freebies for putting up with our bugs okay and i always like to give this question if you remember can you quantify what you spent all in on your mvp before that first dollar revenue how creative were you yeah probably a couple hundred thousand i mean we had for context i have been a serial entrepreneur it's my third startup second venture backed my two co-founders daniel and brian they come from a custom software development background daniel was running biz dev brian was running product at the agency and then we had a fourth developer fourth person on the team who's developing the full system for our mvp so between the four of us upon incorporation we raised about i think like a quarter million going into the start of 2018 that's including tech stars and then by the time we finished tech stars i think we wrapped up like you could call it pre-seed funding but we collected about half a million dollars at that point but we'd invested a couple hundred thousand to get the product to where it needed to be considering the sensitivity of the documents and how important when they function once you pass we wanted to make sure they were right before trying to rush us you know kind of stick together mvp to product market so first customers april 2018 how many are you serving now today uh we're seeing about 100 signups a day or more which is fantastic and our conversion is anywhere from 10 to 20 depending on the product depending on the day uh pretty good conversion to paid customer and we're typically shipping out documents within a 12 to 36 hour period it just depends uh if it's the trust package which is a lot more involved or if it's the will package which is just a simple folder that we can drop ship and put out the mail and ship out across the country so what are those conversion rates i mean if you just the total customer account you're serving now today ignore the one-time stuff just the ones that are paying you recurring to manage all this stuff for peace of mind what is that ad you take like 10 or 20 000 so our recurring subscription will kick in starting this year so when we launched our trust product in january of last year's just california texas we launched the will nationwide in january because we're still a young company right like we've only had two years really of operating history but we've only had a product in market for about a year and a half so our first round of subscriptions will formally kick in starting this month but what's been interesting is that since we launched the will in april 2018 over the course of that last year or since then we've had people come back that set it up because they got married they wanted to update it because they had kids or they wanted to update it because they moved states bought a new home so we're seeing about 1 in 100 folks come back to make that initial update without any marketing around the fact that hey you should come back and update if you've had any of these life events as triggers so as we move forward into 2020 beyond we're not just manually reaching out to our members to say hey if you had one of these things happen here's why you should update your documents but we want to also encourage with our development team leveraging technology to know or predict when these events happen we know that you got married you had a kid you moved to states you bought a new home to trigger an email to get our members to come back and make those updates okay so just so just to be clear you have 65 000 signups to date of which about between 10 and 20 have converted to paid but that paid were those one-time fees you told us about earlier you don't have monthly recurring subscriptions yet that's going to kick in this year we don't yeah subscriptions formally kick in this year i mean we were charging for updates the price of the subscription we would charge for updates throughout 2019 which gave people any life event that happened the ability to come back make the necessary updates and still get their documents printed and shipped to them but it's about a one percent conversion but that was off a small batch of the initial customer base from 2018 since that was really our first year in market we only had one product 2019 we launched two more products so three in market which means 2020 we have first full year three products in market people coming back in and based on the life events that have triggered that would require paid subscription updates and i'll have better better numbers for you as the year progress yeah well it sounds like the subscription thing will be i mean they're paying for peace of mind so i'm eager to hear in a year how that progressive i i assume that's going to do extremely well yeah the vision i mean the whole vision for the company is as we push the regulatory landscape for all 50 states to allow for an end-to-end digital experience digital signature digital notary digital storage of documents we want to forego even the need for that significant upfront cost and immediately kick you into the subscription day one yeah which is just an ongoing annual fee and that can be subsidized through partners well you raise capital right so like the setup fees typically in sas companies are usually to recoup cac right instantly that allows your economics to be healthier but now that you've raised capital you can afford to have a 12 or 24 month payback and you can afford to get people on a recurring plan with longer ltvs versus the one-time upfront stuff so i mean will you eliminate the one-time upfront stuff this year it's possible on our entry level documents so the guardian document potentially because the document for guardian is really top of funnel for us if you're a parent with minor children and you at least want that peace of mind let's get you into the funnel with that product here but very quickly you might realize like i was saying earlier if you have assets you own a home you have investments you have a life insurance policy you want to make sure those are cataloged correctly we bump you up into the will tier or from the wheelchair we bump into the trust so we have flexibility to work with our pricing since our margins are fantastic but we want to be really smart in terms of how do we communicate trust with a paid product because we felt that a free product within estate planning can actually communicate distrust well what's the catch if i'm making these sensitive decisions right what's the catch of a free estate planning document so that's why we like the paid product it's priced competitively but we also want to make sure that we have an opportunity to adjust and evolve our business model and so cody to date now that we understand how the pricing actually works how many customers have paid you at least a dollar to do something uh we have at least a dollar i'd have to run the exact number i mean it's north it's between comfortably sharing north of 5000 and it just depends which product here they chose if it came through a channel partnership or it came direct okay so can we is it fair to just to put a range between five and ten thousand customers that have paid something yeah i'm trying to be mindful of what i'm sharing because we are venture backed and i know we have competitors out there so i'm trying to play that game in my head of like what do i feel is most appropriate to share it doesn't give away kind of the core foundational business metrics yeah i think even even if people know total metrics right public companies are like this right some private companies share all this as well it all comes down to execution right and and so you're executing it sounds like really the part of the secret sauce here is you've built great channel partnerships to get 65 000 free signups walk me through some of those i mean can you name a channel partner and why do they promote you for someone else yeah yeah absolutely so one of our longest partnerships is with haven life insurance haven life insurance is a subsidiary of mass mutual they're targeting young families with term life policies up to a couple million dollars life insurance and estate planning go hand in hand they're so complimentary most people start to think about life insurance because they got married or started a family it's very complimentary to why people start to think about a will is generally what most people think to do versus a trust which takes a little more kind of financial knowledge and savvy to understand so we have haven life where they have a benefits package called haven life plus they've wrapped in our will as a free will okay for their life insurance policyholders and we have a phenomenal conversion from a haven life policy holder to a trust and will will customer yep let's say they drive you you told me a price point earlier for the will of 70 bucks to set up then something like 20 bucks a year ignore the yearly stuff because that's kicking in this year but if haven drives you a 70 one-time customer do you just split 50-50 uh no so we wholesale with them so we get the their their customers are getting the will for free and then they're paying us a wholesale rate because it's a bulk rate end i see interesting okay yeah they're much larger than trust and well they're obviously funded by massmutual one of the largest life insurance companies in the country it's still a mass mutual policy that you're getting it's just haven life is the brand that they're marketing towards this younger family demographic on interesting so haven't come to you at the beginning of 2020 and say listen cody we're gonna sign up five thousand people this year what's achievement for your will product we're not paying 70 bucks for every one of them can you give it to us for five bucks but we'll commit to again a thousand and pay you 5 000 right now precisely and we have a ton of flexibility to do that not just with insurance companies but we'll be announcing some partnerships in the financial services space here in 2020 that functions fairly similarly either through a wholesale rate or through a revenue share interesting okay uh talk about the team how many folks today yeah we got 11 people on the team so three co-founders we got a 10-year trust in the state's attorney head of marketing a lot of product engineers how many engineers writing code we have five okay okay and now your price point is not one that lends itself to field sales right it's it's a more of a no touch partner kind of model so do you have any quota carrying sales reps or no not yet no it's uh it's an area that we're exploring one of the interesting channels that will be evolving this year is financial advisors so one of the roles that we're hiring for right now is a channel sales rep we want to tap into the 300 000 financial advisors wealth managers cfps in the country that often talk to their clients about estate planning from day one it's part of the onboarding conversation do you have an estate plan if not can i recommend you to someone in my network we feel there's a massive opportunity to grow our network through the financial advisor space and to onboard their clients into the trustable ecosystem so basically building out a tool set for clients but also to help be a part of the estate plan over time which we're really excited to kind of announce more formally in the coming months that'll be exciting now we usually focus in depth on sas companies on the show now you don't have the recurring stuff kicking in yet so churn might not be critical for you right now you obviously can't really measure turn on a one-time product are you measuring churn right now and if so how are you using it as a leading indicator or lagging indicator that's an awesome question it's so interesting like estate plans it's such an essential life document our hope is that people don't ever turn out that people will just kind of pay that recurring fee we give them peace of mind and trust that we're always there to notify them of any law changes to keep them on track if any life events happen in their life we want to make sure those are reflected they always have an updated estate plan so the goal would be to keep people throughout their entire lifetime even through death which is part of our longer term vision to get into the distribution side of trust in the states that's where a lot of money is made in this industry but again it's not accessible to a lot of families people don't have the education on the importance of a trust so we want to be with them throughout their lifetime but yeah we'll have better numbers you still have to convince them though because you don't have anyone on actual recurring plans yet that's this project for this year corrects the recruiting plan so at the checkout screen you are opting into the recurring payment the annual payment what we're doing is taking a very hands-on high-touch approach to our member support we call members instead of like a user or customer just because it humanizes or someone that's going to die soon and make you a lot of money yeah exactly you really we want to have that hands-on high-touch approach to as that activation of the subscription kicks in we're helping educate our members on why they want to pay the subscription which is peace of mind ability to update the documents cost of basically repaying the full purchase price again that if they canceled out of the subscription they came back in three years because they had another kid they want to update their trust it's going to cost them the full purchase price versus that 50 bucks a year recurring so the goal is just to kind of keep them looped into it as long as possible yeah yeah if we take that 5000 customer number from earlier times that average rpo of 50 per year that they're opting on the checkout screen that's you know quarter million bucks obviously per year it's fair to say you're north of that at this point yeah that's yeah we yes okay do you think you'll break a million this year or did you break it 2019 or no uh revenue run rate yeah we broke a million in 2019 which is awesome how do you calculate run right though for this kind of company it's up front it's that upfront fee and then it's ongoing uh ltd with a five-year basically goal with a churn baked in we have 10 churn baked in it's it's kind of it's tough to do it with our predictive model versus actuals which we'll have much better grip on going into this year uh but that's um so when you say when you say you break a million dollar run right though typically when i talk to traditional sas companies where there's no upfront fees it's pure subscription what that means is you broke 83 000 a month in december of 2019 multiplied by 12 your run rate is north of a million for you though i'm trying to figure out how you handle the 300 one-time setup fees right do you you don't include those in your run right because those are one time correct correct okay got it so basically the the average price point of your recurring plan you said earlier is about 50 per year what you're saying is you have enough people paying 50 per year that you've broken a million dollar run rate at this point yeah well both we broke the million dollar run rate through the upfront purchase price that will factor in we'll break a million dollar subscription run rate as well okay and you think you'll do that in 2020 yeah this on the just the subscription side correct yeah i mean we have we raised the six million dollar series eight so we're going to be investing pretty heavily in our marketing and acquisition efforts and based on our revenue model we have a pretty ambitious revenue goals for the year that's good very good um i assume you're obviously burning capital correct you're not profitable not profitable yet no that's that's part of the goal of the series a fundraise that's what we communicated to our investors it's important to us as a company i think that there's been like this huge shift in private companies that are shooting for some sort of target raise or evaluation which i think is important but it's not the end game i think i'd rather hit a billion dollars in revenue than a billion dollar evaluation and that's the way that we kind of think about the short and long term goals for the business you have a kid on the way burn cannot you know they can keep you up at night burn can also keep you up at night i mean how comfortable how much are you comfortable burning per month where you can still sleep well at night yeah well we factor in the fundraise for two years of you know full operation so that's assuming that we made no money stayed flat we have two full years to go operate the goal would be to drive our revenue goals our product goals and partnership goals for 2020 and then look at a series b fund raise in early 21 and at that point we would be looking to raise a sufficient amount of capital to like really position trustable to be the category leader in modern estate planning so we're playing the game adventure it's part of the process we're very fortunate we've brought on incredible investors but it's always about working towards that next fundraise and then working back from the milestones we need to hit in order to justify what could be for us like a 15 to 25 million dollar fundraise in 14 to 16 months yeah so you raise six million you give yourself two years of runway 24 months that's not burned monthly of about a quarter million you're basically saying you're going to try and stay well under that every month give yourself enough time to get to that next round yeah we're in san diego so we're not like your typical bay area or northeast startup you know we have we're spending a few grand a month on rent in this great office space market rates we're paying people competitive salaries but market rates down here far cheaper than what you would expect in the bay area seattle and the northeast so dollar stretches a little bit further which works in our favor all right let's wrap up here with the famous five number one favorite business book favorite business book uh recently i love secrets of sand hill road by scott cooper of andreessen horowitz like i'm good at fundraising it helped unlock my fundraising superpowers so i'm really uh bullish on that book right now number two is there a ceo you're following or studying yeah oh man justin khan at atrium is someone who i've really started to admire i think that he's taken a really thoughtful approach to how he wants to better himself as a person a human a husband a father but also as a ceo to his company and i really i like engaging with this content cody number three what's your favorite online tool for building your company favorite online slack i love slack live and breathe slack this number is going to go down this on this next question uh when the baby comes but currently how many hours of sleep are you getting each night uh about seven i've really prioritized sleep last couple years and uh seven is comfortable and it sounds like married do you have any kids currently or this first one's the first one so first yes first one so that seven hours will probably go to three all right and how old are you i'm 30 years old okay last question cody take us back to your 20 year old self what do you wish he knew uh 20 year old self uh it's gonna work out i think you put so much pressure on yourself when you're like about to finish school or you're kind of entering like this next decade of your life of like being an adult for the first time and if you surround yourself with good mentors and a good group of friends things naturally start to play out as long as you kind of stay out of trouble and be mindful of your health guys there you have it trust and will serving over 5 000 folks helping them whether they're a parent and having guardian plans or setting up their will or setting up their trust they passed a million dollars in run rate last year hoping to scale obviously aggressively past that here in 2020 they've raised eight million dollars to do it six million most recently a team of 11 people obviously burning cash to drive that growth five engineers right now they've baked 10 groceries into their plans but they're truly launching true recurring revenue plans really this year so it'll be their first full cycle with three products we'll see how that performs meantime they've got a great channel partnership strategy with folks like haven insurance who base who they wholesale subscription plans to and let them go sell that way it helps them keep their cac down get more exposure and scale cody thanks for taking us to the top yeah thanks for having us nathan these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now