How Aptem Hit $8M in Revenue Helping UK Companies Train Employees Faster and Comply with Regulation (Interview with CEO Richard Alberg)

Introduction and Company Overview

Nathan Latka

00:00Aptima is helping companies, big training companies in The UK teach more people faster in a more efficient manner. They have 170 customers today that pay on average $40,000 per month for that software. They broke about $8,000,000 this year in revenue, up 20% year over year from 6.5 last year, which we love. They've got a nice team of of a 120 folks today, 70 on product, five quota carrying reps. Last valuation, 3,000,000 round last year at a

00:2240 caught 40,000,000 pre money evaluation as Richard looks to continue building that is hoping to hit 9 or 10,000,000 of revenue next year. Hey, folks. My guest today is Richard Ulberg. He is serial human capital entrepreneur, fascinated by technology and how he deploys it to prove and how we deploy it to improve our lives. He's motivated by working with interesting and capable colleagues, married with two adult children, and then also an instrument rated pilot, now building

00:47a SaaS for vocational training providers. Richard, you ready to take us to the top?

Richard Alberg

00:52>> Absolutely, let's go for it.

What Is a Vocational Training Provider

Nathan Latka

00:54All right, what's an example of a vocational training provider?

Richard Alberg

00:57>> So in The UK, we have a regulated term, you use it in America as well, called apprenticeships. And essentially, you can go to college, you can go to university, you can go to school, and you can be a student and study. But in The UK, there's over 3,000,000,000 a year being spent on people who have a job, who are in employment, but are nevertheless learning skills to go one step higher. So it can be anything from

01:26>> learning how to be a hairdresser, to learning how to be a software engineer, to being a police constable or a nurse, adult care, etc, etc. It's a big market, half a million people a year in The UK being trained, 1,500 different organizations doing this training, and my company provides technology to those organizations in order to run their business.

Nathan Latka

01:50Got it. So the org would I wanna be I'm in The UK. I wanna learn how to cut hair and be a stylist. The company that is going to employ me would pay for your software and teach me how to be a better stylist at their salon.

Richard Alberg

02:03>> With one little subtlety, the company that employs you would employ a training company who would be delivering to you. So you might work four days a week in the business, working in the salon, but half a day to a day a week, you'll be studying.

Nathan Latka

02:22Who's an example of a training company that might teach someone that wants to cut hair that sits in between the hair cutter and the salon?

How Aptem Fits Into the Training Market

Richard Alberg

02:31>> There are many.

02:35>> LearningCurve are one of the big ones, Hobbs Salons, they're a salon training company, they're salon operator themselves, but they also do training. The key thing in The UK is it's regulated. It's not a tax break, in fact it's the opposite. Every firm in The UK with a payroll of £3,000,000 or more has to pay half a percent of that payroll into a tax that goes towards funding vocational training. So So what you've got is this big,

03:04>> big pot of money for training and it's use it or lose it. But because there's government involved, there's compliance and regulation. That's the bit that we're a little bit different on.

Nathan Latka

03:17So you're selling to LearningCurve and to HopeSound?

Richard Alberg

03:21>> With HopeSound on LearningCurve, Lifetime, there are 40 universities in this country who use our technology. We are the largest provider in The UK of technology for this type of training.

Customer Examples and Regulatory Context

Nathan Latka

03:34So Richard, how many paying customers do you have, including the 40 universities in Hope Sound?

Richard Alberg

03:39>> About 170.

Nathan Latka

03:40Okay, 170. And how do you price for them? Is it per trained employee or per seat or what?

Richard Alberg

03:47>> We currently do per learner per month.

Nathan Latka

03:51And what is So if you've

Richard Alberg

03:52>> got a thousand learners in training, it's a thousand times that amount each and every month.

Nathan Latka

03:57And what is that average amount per learner per month?

Richard Alberg

04:00>> Oh, the higher level is about eight pounds, and then it reduces down with volume. A large customer will

04:11>> three pounds, something like that. But that's very high volumes. A large customer will spend a couple of 100,000, 300,000 a year with us, a small customer maybe 10,000 a year with us, and a sort of typical customer 40 to 50,000 a year with us.

Nathan Latka

04:29Oh, 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 Founder Path. Check this out. I'll show you how you can access this in a second. But you log in, you

04:52connect your Stripe account, you see your valuation real time, you can see what 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 Founder Path dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're

05:17gonna 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

Customer Count and Pricing Model

Nathan Latka

05:39is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders 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

06:04you're going out right now and you're raising your seed round. Well, 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 Founder Path. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second,

06:26but if 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

Largest Customers and Learner Volumes

Nathan Latka

06:52into the interview. So someone's is is that your biggest customer say they pay about $300 a year?

Richard Alberg

06:57>> A bit more than that. Yeah.

Nathan Latka

06:59Okay. And and how many seats or how many learners are they probably using you for per month?

Richard Alberg

07:04>> They probably will have fifteen eighty fifteen thousand to 18,000 learners in training.

Nathan Latka

07:10Per month?

Richard Alberg

07:12>> At any one time. So again, without digging into much detail, in The UK, an apprenticeship course lasts a minimum of one year. But where we deal with universities, often a we call them learners. The learners are on a three or four year course because they're doing a degree.

ARR, Revenue, and Growth Rate

Nathan Latka

07:29I see. I I see. Okay. So a 170 customers paying on average $40,000 per year would put you at about 6,800,000 of ARR today. Is that accurate?

Richard Alberg

07:37>> Yeah. About that. A bit more

07:39>> than that. It would are you talking dollars or sterling?

Nathan Latka

07:41Let's do dollars.

Richard Alberg

07:43>> Dollars were about 8,000,000 ish.

Nathan Latka

07:45About 8,000,000 ish. Okay. And do you remember just doing it at growth rate, where were you exactly a year ago?

Richard Alberg

07:54>> We would have been something like 20% less. Put it this way, we have for the last four years done over 50% year on year growth, but we've recently run into a problem, which is the bigger you get, the harder it is to maintain your percentage because each month we throw in two, three more customers, maybe four customers in a good month. But the bigger we are, it's a denominator. So the issue we have is how you

08:22>> reprice the existing book of customers that you have because the main contributor to growth has been the number of new customers we secure each month. We have very, very low churn, but we have Well, only two or three new in financial terms, last year was 2.3%.

Nathan Latka

08:42That's on revenue basis or a logo basis?

Richard Alberg

08:44>> On revenue basis. No, revenue basis.

Nathan Latka

08:46Okay, sorry, 2.5%, that's for the year now.

Richard Alberg

08:48>> 02/2003, I think it was. 02/2003 was last year's churn in financial terms.

Churn and Net Revenue Retention

Nathan Latka

08:522.3 and that's gross dollar churn?

Richard Alberg

08:55>> Yes.

Nathan Latka

08:56Okay, did you have expansion revenue to get above 100% net retention?

Richard Alberg

09:03>> No, that's our problem. We will soon because we're now adding in adjacencies, additional things we can sell, but for the first three years of our growth, four years of our growth, we haven't had anything additional to sell to a customer.

Nathan Latka

09:17Richard, sorry, I don't understand that. If you've got LearningCurve paying you a thousand dollars in one month for 10 trainees per month, if they love you and they expand to 20 trainees per month, you have natural expansion revenue built in. Why don't you have enough revenue?

Richard Alberg

09:30>> That's not how business works. We have every trainee they've got. There's no choice for our customers. They run their entire business on our platform. Even the way they get paid is via the financial calculation that's run by our platform.

Nathan Latka

09:44Okay, but Richard, same point.

09:48If HopeSound was using you effectively to train their customers, they would have had, HopeSound would have had customer growth the past couple months, and their customer growth would have been your revenue growth.

Richard Alberg

10:00>> Yes, and some of our customers do better and some do worse. And in fact, one of the features we've had in our business is we've gone for larger training providers. So when we started, we would get any customer we could get. It didn't matter. We were happy to sign anyone. As we

10:21>> started to progress, we started to think a little bit more about the kind of customer we want and we went for either large or medium sized training companies and didn't go for small ones. But the one challenge with that is that your volume discount starts to hit you a little bit more because if you're mainly winning bigger companies, they tend to get more volume discount. So that's had a certain

Nathan Latka

10:45Yeah. Richard, it's

Richard Alberg

10:46>> an impact

Nathan Latka

10:47on I understand. But my my question is, if you signed HopeSound a year ago, right, for 10,000 trainees per month on average and HopeSound is doing well, they're growing. Yes. Partly because of your software and now they train 15,000 per month. You should be getting paid more from HopeSound for the extra $5,000 training per month. That would be expense You're

Richard Alberg

11:11>> absolutely right if there was such a strong correlation between our software and our customers'performance. Now, our software does three profound things for our customers. Operational efficiency, that's not necessarily quality of delivery. Sorry, but Richard,

Nathan Latka

11:27I don't mean to cut you off, sorry, you said you price against number of trainees. This should be a very binary thing. Hope Sound has more trainees a year later. That should mean more revenue for you if you price per trainee.

Richard Alberg

11:39>> Only if our customer has growth. What if there is some growth?

Nathan Latka

11:43Okay, so why aren't they all growing? That means your software is not working.

Richard Alberg

11:46>> Well, that's one way of looking at it. I would see it another way. The market we sell into is a very competitive market. It's driven by a lot of macro issues that aren't necessarily just about the software. So some training providers grow, some shrink, some pull out of particular markets, some sectors like hospitality were having a hard time, therefore there were fewer learners in training. The market has many dynamics.

12:13>> Our software is not focused on quality of training so much as the efficiency of operation, the compliance, and the data driven decision making for those running the business. So, while it clearly does influence on quality to some extent, there are many other variables. The quality of the curriculum, the quality of the tutors that organization employs, how good they are at selling to employers their services. Those things will affect why some win and some don't, but the

12:44>> apprenticeship market has actually been declining by a few percent a year in the last handful of years for a variety of reasons due to funding.

12:54>> So, we can't just ride a rising tide. What we do is we increase our market share and that's what we have been doing.

Nathan Latka

13:03Yep, that makes sense. Okay, that makes sense. Take me back, do you remember your first million dollar revenue year?

Richard Alberg

13:09>> Yes.

13:11>> That would have been about 2018 or '19, something like that.

Nathan Latka

13:172018, okay, and when did you put this all on a big timeline for us, when did you launch the business?

First Million Dollar Year and Company Timeline

Richard Alberg

13:22>> Well, I launched the vocational training space in 2016, That was our first customer in this market was 2016. The company was being run by me as a bit of a lifestyle, kept me busy, but using the technology in a totally different way for a handful of years. But our vocational training, which is where our business is now, our first customer was 2016.

Nathan Latka

13:46Okay, when did you write the first line of code for the platform?

Richard Alberg

13:50>> That was written in 2009.

Nathan Latka

13:53Okay, and so between '9 and 2016, were you just not full time? You had a side gig or something to pay the bills?

Richard Alberg

13:57>> No, we were. So what happened, we were in a different market. We were using our technology to deliver to organizations doing employability contracts, and we did very well in that, but it was a fundamentally cyclical market. So essentially, when unemployment was high, our business was very buoyant. When unemployment came down, our business also went down. That was not a healthy market to be in, therefore we needed to pivot into a new space.

Pivot from Employability to Vocational Training

Nathan Latka

14:24Understood. And

Richard Alberg

14:26>> that's when we picked Invocational Training.

Nathan Latka

14:28Talk to me a bit more about how you've capitalized the company. Are you bootstrapped there? Have you raised money?

Richard Alberg

14:33>> We've raised about 8 or 9,000,000.

Nathan Latka

14:35Okay, when was the first round closed and for how much?

Richard Alberg

14:39>> $20.18, and we probably about $1,500,000 to $2,000,000.

Nathan Latka

14:45Okay, and what made this, I guess most people sell about 20% of the company in their seed. Did you do the same about 20% equity?

Richard Alberg

14:53>> Yeah, maybe a little less. I had funded it beforehand. I put quite a bit of fund. I had put in the first moderate slug of capital myself. So we had already got to, as I mentioned, we were second figure income by the time we did our first round.

Nathan Latka

15:06So that would have been like 2,000,000 on a million post, you sell 20%, something like that.

Richard Alberg

15:11>> Yeah, a bit less than that, but yes.

Nathan Latka

15:13Okay. How much, I mean, I always like to know how much founders put their own money on the line ahead of that, right? I mean, did you put like $100,000 into the company before that?

15:20>> No, I

15:20put about

Richard Alberg

15:21>> 1,500,000 in.

15:22>> 1,500,000.

Nathan Latka

15:23Okay, so did you already have an exit? How'd you get so rich? Where'd you

Richard Alberg

15:26>> get I've your

Funding History and Capital Stack

Richard Alberg

15:28>> already grown one company, sold it to a public, US public company. That's why this business started in 2009. Was bored. Had sold my last company, I had done my exit, my earn out, and I just wanted something to keep me amused while I was thinking of the next thing to do. So that's why I started the business and we did quite well quite quickly, but in a cyclical market. So I either had to shut the company

15:53>> down after we'd done very well financially, but just wind it down because it wasn't a good long term market, not strategically, or pivot into a new space. So, other thing I did is I actually started our first customer. So, one of the challenges is when you are an end to end platform, how do you win your first customer when people say it's a brilliant idea what you're proposing doing, but who have you done it for before?

16:16>> And you say no one, And that's a bit of

Nathan Latka

16:19a challenge. They say, do you

Richard Alberg

16:20>> want me to trust my entire business on your platform? So, in fact, I set up a training company with a partner who was our first customer, and we grew that to be the fastest growing training company in the country. We grew it to over 20,000,000 in revenues in three years and sold What private

Nathan Latka

16:36was the name of that company?

Richard Alberg

16:37>> Corndel, c o r n d e l.

Nathan Latka

16:40Corndel, okay. When did you launch that company, what year?

Richard Alberg

16:44>> 2016, it was our first customer.

Nathan Latka

16:48Okay, and sorry, you've grown that today, it's doing 20,000,000 a year in revenue, it's a sign?

Richard Alberg

16:51>> No, it's doing a lot more now. We sold it after three and a half years for 45,000,000 to CrowdEquity.

Nathan Latka

16:58Okay, got it. So you built that from 2016 to 2019 to really get close to your market professional services, train them. You exited that in 2019 for $45,000,000 reinvested that money in your software solution, and now you're fully focused Not on

Richard Alberg

17:11>> quite, forgive me. 2016 started that first customer, but but then we also, at the moment we were doing that four or five months later, we started winning other customers as well. The idea was to use a first customer to show it could be done and to learn. So meanwhile, that company was growing, but so was Aptam. So Aptam went from one customer to two, five, ten, fifteen, etcetera. Then we sold that business to private equity in

17:41>> November 2020. And by the way, we sold it to that number in sterling, not dollars. The number's a bit higher. But by the time I had made that sale, we had raised quite a lot of money through external VCs. Although I put the first slug of money in, it was through institutional VCs.

Nathan Latka

18:01Got it. What can you fill out the capital stack for me? So 2,000,000 seed in 2018. When was the next round?

Richard Alberg

18:06>> Oh, probably a year later. We did almost a round a year, eight every eighteen months for the next handful of years to end up at about eight eight and a half,

Nathan Latka

18:15nine years. When was the most recent round, Richard?

Richard Alberg

18:17>> I August 2022, I think.

Nathan Latka

18:21Okay. And how much was that? Was that for 2,000,000 as well?

Richard Alberg

18:23>> About 2 to 3,000,000. I think it was slightly closer to 3,000,000.

Nathan Latka

18:28Okay. Interesting. So call it 2,530,000. And would you consider that like your series A or B or C or what?

Richard Alberg

18:34>> Who knows the terminology? It's early stage. I mean, it's growth stage.

Nathan Latka

18:37Okay.

Richard Alberg

18:38>> It's growth stage because we're no longer proving product market fit, that Shipp has said.

Nathan Latka

18:43I know. The comp we're trying to get to go is a series a, most folks are selling 10 to 15% of the business. Were you in that same range when you closed that 3,000,000?

Richard Alberg

18:51>> Each time would have been so the last valuation was just shy of 40,000,000, just under Pre 40

Team Size and Sales Organization

Nathan Latka

18:58money or post?

Richard Alberg

19:00>> Pre

19:01>> money.

Nathan Latka

19:02So about 43,000,000 post money, something like that.

Richard Alberg

19:04>> Something like that. Yeah, I'm sorry, I should know exactly that number, but it's not that ilk. It was in the late thirties, early forties, pre money.

Nathan Latka

19:11Understood. Last round of it.

19:13Understood. We're running short on time here, but flesh out the the rest of the team you have building this thing. How many folks are full time today?

Richard Alberg

19:19>> We now have about a 120 people in the company.

Nathan Latka

19:22Wow. How many?

Richard Alberg

19:24>> How many engineers? That's sixty, seventy people in the product and engineering function.

Nathan Latka

19:29Wow. How many quota carrying sales reps?

Richard Alberg

19:33>> About five. Okay. Four to five.

Nathan Latka

19:36Okay. Very cool. And what do you think growth looks like for the next twelve months? Where do think you end next year at, 2024?

2024 Revenue Targets and LLM Investment

Richard Alberg

19:42>> So next year, well, our financial year ends in April. So if we go to sort of this calendar year, we'll probably get up to in dollar terms something like 9,000,000, 9,500,000, but we're about to have some very significant growth because we've been investing significantly in large language model solutions, and if you think of the power of a portal, of course you can do everything we're proposing doing outside of our platform, but doing it from within the

20:13>> platform is so much more capable The prompt engineering driven by the information in our database, you can just achieve so much more. And education or vocational training is one of the really strong use cases for large language model output. So we are seeing that as potentially doubling our business just through selling more to the customers we've got. We'll see what doing.

Famous Five Rapid Fire Questions

Nathan Latka

20:40We're certainly rooting for you. We're out of time. Let's wrap up here with the famous five, number one favorite book.

Richard Alberg

20:46>> Gosh, I haven't read for quite a while. I'm actually I'm reading

20:51>> come back to

Nathan Latka

20:52that moment. I'll just remember the name because I've No worries. We'll skip it. Two, is there a CEO you're following or studying?

Richard Alberg

21:01>> I'm really impressed by Sakhi Nadella. The way he's turned that business around is is absolutely phenomenal. By the way, the coming wave is what I'm currently reading by Mr. Elsiliman, and it's frightening and interesting.

Nathan Latka

21:14Number three, what's your favorite online tool for building Aptam?

Richard Alberg

21:22>> Mindjet, My Manager. I use My Manager extensively for doing my planning.

Nathan Latka

21:26Number four, how many hours of sleep do get every night?

Richard Alberg

21:31>> Five to six.

Nathan Latka

21:32And what's your situation, Richard? Married, single, kiddos?

Richard Alberg

21:35>> Married, two grown up kids.

Nathan Latka

21:37That's awesome. Okay. And can I ask how old you are?

Richard Alberg

21:40>> I'm 58.

Nathan Latka

21:41Last question. Something you wish you knew back when you were 20.

Richard Alberg

21:45>> How to delegate.

Nathan Latka

21:47Guys, there you have it. Aptima is helping companies, big training companies in The UK, teach more people faster in a more efficient manner. They have 170 customers today that pay on average $40,000 per month for that software. They broke about $8,000,000 this year in revenue, up 20% year over year from 6.5 last year, which we love. They've got a nice team of of a 120 folks today, 70 on product, five quota carrying reps. Last valuation, 3,000,000

Closing Summary

Nathan Latka

22:10round last year at a $4,040,000,000 pre money evaluation as Richard looks to continue building business, hoping to hit 9 or 10,000,000 of revenue next year. Richard, thank you for taking us to the top.

Richard Alberg

22:21>> Thank you for really appreciate it, Nathan. Have a good weekend.

Nathan Latka

22:25One 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

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