Yaypay Revenue, Valuation & Funding (2020)

hello everybody my guest today is anthony venus he's a serial entrepreneur and co-founded his current company yay pay in 2015 to make collecting money easy fast and highly predictable previously a co-founder strategic intelligence an online publishing company market share which is an online survey research company which he sold and meridian a loan origination firm he's australian based in new york city and has lived and worked in five continents all right anthony you ready to take us to the top absolutely all right so yay pay help us understand like are you serving kind of b2b companies or is this more of a b2c play no it's all b2b so we serve companies anywhere from 50 million up to about a billion dollars in size uh there are some bookends to that but it's all about making collecting money fast and easy and highly predictable so it's automating the accounts receivables process so we're in the back office we're in the cfo stack of tech and the users are accounts receivable specialists credit collection specialists and the buyers tend to be controllers and cfos and vps of finance that want to automate that process which they would otherwise use people and spreadsheets for okay and just to be clear this is a this is a piece of software you're not doing things like you know giving people the full acv the annual contract value up front while the customer pays every month that you're not doing like receivable loans right no we're not doing that actually we're really automating the workflow we're providing a crm system for the back office um also we're predicting cash and bad debt as well by bringing in a couple of years worth of data from your erp system so it's basically automating all those manual repetitive tasks that people shouldn't do anyway yeah okay very good so um how do people pay for this what do they pay per month on average yeah so it's an annual upfront uh sas license fee the acvs are now creeping up to nearly twenty thousand dollars and of course that ranges at the low end ten thousand the high end about eighty thousand dollars what's the average across the current base not your current pricing but your current base the average is exactly some just shy on 20 000 it's like 19 600 and something at the moment yeah that's great and you said you launched in 2015 correct we did yeah the idea was um germinated in 2015 we dabbled around and ripped things up a few times in 2016 on boarded our first customers in 2017 and we've got up to about 90 customers now about 600 users right across wholesalers manufacturers and high-tech companies as well 90 customers at 20 grand a year is about 150 grand a month right now in revenue is that right about right yeah and where were you a year ago oh my god we were very nasty a year ago it's just it's blowing up many many times over the last year so what was mrr would you say a year ago it's like you know 10 of that amount so it's really the last 12 months we've seen the traction and it really coming to a point where it's getting really interesting so just be clear january 2018 you're probably doing about 15 grand a month now you're doing 150 correct yeah and where where must that growth come from new customer ads or expansion on the historical cohorts it's a bit of both actually so um certainly certainly after using the platform for a year they see the roi uh customers are getting paid 34 faster you just key that in it's saving on head count we also save a ton of money on payments as well so certainly we've had price rises by about anything from 30 to 80 percent year on year you mean what do you mean year one to your 2acv like the contrary values increase between 30 and 80 correct yeah that's happened uh and also just moving up market as well we've moved into bigger companies over time but also launch more modules so we started off it was just about collections management then we launched payments uh now we have invader credit assessment uh cash application is coming out so we're automating the entire credit to cash process so from credit assessment collections management invoicing payments cash application analytics the whole thing and have you bootstrapped the company or have you raised we raised some money uh we've raised a total of 14 million dollars so far i bootstrapped it for the first 18 months or so and then found out that being in the back office is an expensive place to be it's a very high compliance no fail no mistake type of software it's high compliance accounting software also we have to go sock to uh compliant very early on you've got money payments running through the system so um yeah it was a heavy build actually and what's the team size look like today how many people we're 45 people uh we're spread between new york and also kiev in ukraine but we have a lot of developers over there as well okay so new york and ukraine and then i assume you're burning cash to invest in growth how much are you burning every month oh i can't reveal what we're burning every month but we're certainly you know we're not going to be we're not planning to be cash flow positive for a couple of years we could switch that dial um if we wanted to i would say within about nine months okay um but the idea is of course to reinvest in that growth and to really capture market share while we can anthony more or less than caught 500 grand and burned monthly no we're not we're not unless yeah yeah okay good um that's great and then um when was the last round so we can get a sense of timing here yeah so we put in uh 8.4 million in december oh just recently yes that's up in toronto uh supported as well a fifth third bank uh we've had a bank behind us as well the whole times that's been great also but that's just to be clear that 14 million is equity there's no debt in there all yeah okay good so so the eight was raised in december and when when you strategically when you're planning how much to go raise how many months of runaway were you raising for 12 or 24 or about 18 months of runway um i'm really interested to see how the economy pans out right now i think everyone's watching that i've been through ups and downs and recessions over the years and i'm just conscious of having enough gas in the tank uh when the time comes yeah raising for 18 months of runway and you raise 8.4 million bucks it means you're kind of budgeting 450 grand spend basically over 18 months right over the time over time yeah yeah uh interesting okay very good um it churns obviously critical on a sas company you know how do you think about retention and stickiness of customers so here's this is the most brilliant thing about the business so um while being in the back office you know we have other challenges like you know integrations and other type of things to worry about um it's a very sticky product so we have three percent churn uh when you take the time logo turner revenue churn that's revenue turn logarithms about five percent just a little bit higher and that's per month or per year yeah okay per year so it's one of those very sticky products we become your business process for collecting money it's mission critical uh but certainly yeah that's that's uh the joy about being in a back office there are also many challenges as well but churn is uh certainly one we're happy with and is that three percent revenue insurance per year is that net or gross uh that is gross we have net negative churn of about 115 percent nearly now okay so well just to be clear just i think you tell me if what you're meaning to say is this you have net revenue retention of about 115 percent correct yeah okay cool negative 115 percent churn would be a very different negative yes yes 150 net revenue retention um that's great so if you have three percent churn that means you're getting three percent back plus an initial 15 in expansion so your expansion arm is about 18 year-over-year yeah that's great and what pricing axes are you using to drive that expansion is it seat based or receivables based or invoice quantity-based or what pricing is one of the most interesting things i'm sure you're here for every sats ceo it never ends we um we threw out the seat based pricing very early on uh our idea is that we wanted to get as many people in the back office and also by the way sales and customer success also touch money so they're also users as well so there's no limit on users and the value metric that we use is volume based so it's a number of invoices per month and that steps up in pricing depending upon that and as well as there is some feature differentiation which on which type of platform you take so if you're a larger enterprise you'll you'll take a platform that support supports uh multiple subsidiaries for example compared to if you're a more simple company you'll be on a different uh base fee but it's really volume that we use okay so feature based a little bit but mainly invoices per month the best sas companies have multiple pricing axes especially value kind of driven metrics are are there any other metrics besides number of invoices per month you plan to use in the future to drive up sales we've experimented and looked at sort of um just instead of invoices just numbers of customers um but no we haven't uh we haven't gotten ahead around other value metrics yet we've um we've come back to gone different directions to get back to invoices per month a number of times yeah that seemed look it seems seems right to me we'll see what happens um take me back to the first 10 customers for everyone's starting out listening today i mean how did you get your how'd you hustle to your first 10 customers you know what even today i would say you know the way we did it back then and the way we do it today it's a little bit more scale it was good old playing gary glenn cross it was it was what glenn gary glenn ross like that sales movie uh you know it was pick up the phone it was um how did you find the number uh we literally just targeted uh controllers and cfos of originally it was ad tech companies actually um we knew that they had horrible dso day sales outstanding problem in terms of collections we knew that they were amenable to tech so we started there and how did you find them where how did you target them on google or linkedin or what oh no we just made outbound emails made phone calls uh we jumped in their office when we could and then most of the sales now i'd say 95 percent are just done over the phone yeah but anthony how did you actually find the how did you find a website and say okay i know this is an asset company and okay now let me go find the controller right uh are we what tools did we use yeah like how did you find all the ad tech companies linkedin let's list on linkedin and just uh figured out who the top 100 ad tech companies started going down the list and and uh approaching them and seeing uh who was interested so yeah that was uh where we did it and how made you have to approach before you closed your first deal oh um i say we banged our head against probably 20 companies before we got the first deal and you know you've got the first one the second one the third one and it kind of gets easier from there on yeah that's great very good all right last question here on economics before we wrap up with the famous five um cac what are you spending again get a new twenty thousand dollar your customer yeah so um we've been experimenting across inside sales and across we tried also some value-added reseller channels the cac payback now is sitting around 13 months okay so you're spending about 22 grand a month 22 grand to get them correct yeah and you're spent besides head count sales salespeople marketing etc where are you spending that 22 grand yeah so it's a little bit of a little bit of digital it's a bit of events it's just spread around so it's um it's mostly honestly mostly headcount and sdrs grinding out the phones making those phone calls also some content of course thought leadership every outbound email that we make every outbound phone call becomes it inbound because they go and check out the website they check out the content do these guys know what they're talking about so that's all built in and what's your largest co-order customer so you have manufacturer media ad tech i.t outsourcing on your website which one's the biggest cohort today i would say let's see now it's probably still the big tech companies ad tech it's even at tech i'd say it's actually the big bigger kind of b2b sas platform companies um like we've had on uh flexport but back to ad tech we've got media math which is a pretty big company these days so it's kind of um yeah it's it's up there with those guys uh increasingly some of the manufacturers and some of the the so-called dirtier industries uh flyers energy is our largest customer three billion dollar company um so yeah it's um it's one of those things where if you had 100 cfos in the room in b2b and you said hey hands up who's got an issue with collecting cash you'd get 99 hands that would go up so it's been an issue with focus we started with the tech companies and we also realized over time manufacturers and wholesalers have also got perhaps a more even a deeper need their supply chain businesses that need need to get their hands on cash pretty quickly yep very good all right let's wrap up here anthony with the famous five number one what's your favorite business book you know i read a lot i'm going to tell you the book that i've been reading lately that had the most impact uh is fierce conversations um that was by susan scott talks about uh all the conversations that you should have had in life whether it be personal life and business and uh all the ones you need to have and it's just a great read really useful number two is there an under the radar ceo you're following or studying um you know there's not i'm not one of these people who follows uh these these kind of big name or even smaller under the radar under the radar right um you know what uh i i do work with a ceo coach a guy don chiavoni he used to run a company called grasshopper i get a lot of wisdom out of don so probably don's done a guy usually hero but uh don chiamony i'll give a shout out to don it's just a bit of wisdom in sass and uh anyway number three what billing platform do you use to build your customers well we use japan of course what is it built on top of though it's authorized.net what's the gateway right uh we use aps um we've got aps rails and there's also another deal coming out with us that i'll be able to announce soon uh card connect okay very good number four how many hours of sleep to get every night something that i've been working on um there's an app i've been actually tracking my sleep with uh called auto sleep uh it connects from the apple watch automatically when you fall asleep um i was getting last year like i'm gonna say like five hours sleep and my goal this year is to improve that so i've been getting six to seven on week on uh weeknights these days and um trying to aim for more than that on the weekends but and what's your situation anthony married single kiddos uh i'm married i'm married to uh to a spaniard uh francisco uh who's also in the finance and accounting space so i'm good we've got a lot to talk about at night any kiddos no kids just love our doors no kids yet alright and how are you how old am i on 46 46 last question what do you wish your 20 year old self knew oh my god i would just i would have told my 20 year old self to be kind to myself take it easy uh don't be in such a rush um and it's gonna happen so yeah i think uh i've always been in a rush of a life and uh getting to this this point in life i'm kind of understanding sometimes you take it a little bit slower it happens easier guys be kind to yourself anthony found that you pay back sorry yay pay back in 2015 again helping sas companies add to companies etc get their receivables their invoices etc paid faster and more effectively 90 customers currently paying about 20 grand per year so 150 grand right now in revenue up from 15 grand a month just a year ago so healthy growth they've raised 14 million bucks eight and a half eight and a half that was back in december of 2018 burning way less than 500 grand per month right now plenty of runway team of 45 in new york city and ukraine doing about 115 net revenue retention annually that's 18 expansion and 3 churns spending 22 grand to get a new customer for a 13-month payback period all right anthony thank you for taking us to the top nathan thank you so much be well