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Jan 20, 2023 · 18m · top-founders

Bootstrapped to $35m Revenue, $15m recurring, $20m One Time Connecting Smart cities in Japan with local farmers

Abel Zhao · 8m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

Host Nathan Latka interviews Abel Zhao, CEO of Free D Group, detailing how the enterprise bootstrapped to $35 million in annual revenue by providing AI-driven marketplace infrastructure connecting smart cities and corporations with regional merchants. The conversation unpacks the company's hybrid SaaS and transaction take-rate model, strategic regional acquisitions, and roadmap toward a $100 million revenue target and 2024 IPO.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 45.6% of the talking time here. How this is scored →

Nathan as informed peer 4.9 Guest teaching 1.9 Guest disagreement 1.3 Nathan pushing back 3.7
05100:0010:000:00–4:06 · Nathan as informed peer 5/10 FounderPath Valuation Tool Promotional Announcement Nathan interrupts Abel's broad buzzword-laden explanation to demand specific clarification on who the sellers actually are. Abel readily complies and details the suppliers and buyers on both sides of the platform.4:07–7:20 · Nathan as informed peer 5/10 Monetization Framework: SaaS Subscriptions and Regional Take Rates Abel explains how regional take rates vary dramatically between China and Europe, and clarifies contract sizes up to a seven million dollar smart city deployment.7:21–9:55 · Nathan as informed peer 7/10 Differentiating Custom Implementation Fees from Recurring ARR Nathan forcefully calls out Abel for categorizing one-time customization fees under SaaS, drilling down until Abel clarifies the actual monthly recurring maintenance revenue.9:56–11:56 · Nathan as informed peer 6/10 Platform GMV Scaling and Monthly Revenue Generation Nathan runs through GMV and take rate math to calculate monthly run-rate, while Abel explains why charging nominal software fees increases merchant platform stickiness.11:57–15:30 · Nathan as informed peer 7/10 Multi-Year Financial Growth and $35 Million Revenue Breakdown Nathan parses the thirty-five million top line into recurring revenue versus one-time upfront payments, analyzing the acquisition strategy behind targeting one hundred million in revenue.15:30–17:37 · Nathan as informed peer 4/10 Bootstrapping Milestones, Engineering Team, and 2024 IPO Strategy Abel declines to disclose the acquisition purchase price citing confidentiality, redirecting to their target IPO valuation before answering standard rapid-fire questions.17:37–18:13 · Nathan as informed peer 0/10 Episode Conclusion and Performance Highlights Closing solo monologue summarizing the guest's metrics, acquisition strategy, and revenue breakdown.0:00–4:06 · Guest teaching 1/10 FounderPath Valuation Tool Promotional Announcement Nathan interrupts Abel's broad buzzword-laden explanation to demand specific clarification on who the sellers actually are. Abel readily complies and details the suppliers and buyers on both sides of the platform.4:07–7:20 · Guest teaching 3/10 Monetization Framework: SaaS Subscriptions and Regional Take Rates Abel explains how regional take rates vary dramatically between China and Europe, and clarifies contract sizes up to a seven million dollar smart city deployment.7:21–9:55 · Guest teaching 2/10 Differentiating Custom Implementation Fees from Recurring ARR Nathan forcefully calls out Abel for categorizing one-time customization fees under SaaS, drilling down until Abel clarifies the actual monthly recurring maintenance revenue.9:56–11:56 · Guest teaching 3/10 Platform GMV Scaling and Monthly Revenue Generation Nathan runs through GMV and take rate math to calculate monthly run-rate, while Abel explains why charging nominal software fees increases merchant platform stickiness.11:57–15:30 · Guest teaching 3/10 Multi-Year Financial Growth and $35 Million Revenue Breakdown Nathan parses the thirty-five million top line into recurring revenue versus one-time upfront payments, analyzing the acquisition strategy behind targeting one hundred million in revenue.15:30–17:37 · Guest teaching 1/10 Bootstrapping Milestones, Engineering Team, and 2024 IPO Strategy Abel declines to disclose the acquisition purchase price citing confidentiality, redirecting to their target IPO valuation before answering standard rapid-fire questions.17:37–18:13 · Guest teaching 0/10 Episode Conclusion and Performance Highlights Closing solo monologue summarizing the guest's metrics, acquisition strategy, and revenue breakdown.0:00–4:06 · Guest disagreement 1/10 FounderPath Valuation Tool Promotional Announcement Nathan interrupts Abel's broad buzzword-laden explanation to demand specific clarification on who the sellers actually are. Abel readily complies and details the suppliers and buyers on both sides of the platform.4:07–7:20 · Guest disagreement 1/10 Monetization Framework: SaaS Subscriptions and Regional Take Rates Abel explains how regional take rates vary dramatically between China and Europe, and clarifies contract sizes up to a seven million dollar smart city deployment.7:21–9:55 · Guest disagreement 2/10 Differentiating Custom Implementation Fees from Recurring ARR Nathan forcefully calls out Abel for categorizing one-time customization fees under SaaS, drilling down until Abel clarifies the actual monthly recurring maintenance revenue.9:56–11:56 · Guest disagreement 1/10 Platform GMV Scaling and Monthly Revenue Generation Nathan runs through GMV and take rate math to calculate monthly run-rate, while Abel explains why charging nominal software fees increases merchant platform stickiness.11:57–15:30 · Guest disagreement 2/10 Multi-Year Financial Growth and $35 Million Revenue Breakdown Nathan parses the thirty-five million top line into recurring revenue versus one-time upfront payments, analyzing the acquisition strategy behind targeting one hundred million in revenue.15:30–17:37 · Guest disagreement 2/10 Bootstrapping Milestones, Engineering Team, and 2024 IPO Strategy Abel declines to disclose the acquisition purchase price citing confidentiality, redirecting to their target IPO valuation before answering standard rapid-fire questions.17:37–18:13 · Guest disagreement 0/10 Episode Conclusion and Performance Highlights Closing solo monologue summarizing the guest's metrics, acquisition strategy, and revenue breakdown.0:00–4:06 · Nathan pushing back 5/10 FounderPath Valuation Tool Promotional Announcement Nathan interrupts Abel's broad buzzword-laden explanation to demand specific clarification on who the sellers actually are. Abel readily complies and details the suppliers and buyers on both sides of the platform.4:07–7:20 · Nathan pushing back 3/10 Monetization Framework: SaaS Subscriptions and Regional Take Rates Abel explains how regional take rates vary dramatically between China and Europe, and clarifies contract sizes up to a seven million dollar smart city deployment.7:21–9:55 · Nathan pushing back 7/10 Differentiating Custom Implementation Fees from Recurring ARR Nathan forcefully calls out Abel for categorizing one-time customization fees under SaaS, drilling down until Abel clarifies the actual monthly recurring maintenance revenue.9:56–11:56 · Nathan pushing back 3/10 Platform GMV Scaling and Monthly Revenue Generation Nathan runs through GMV and take rate math to calculate monthly run-rate, while Abel explains why charging nominal software fees increases merchant platform stickiness.11:57–15:30 · Nathan pushing back 4/10 Multi-Year Financial Growth and $35 Million Revenue Breakdown Nathan parses the thirty-five million top line into recurring revenue versus one-time upfront payments, analyzing the acquisition strategy behind targeting one hundred million in revenue.15:30–17:37 · Nathan pushing back 4/10 Bootstrapping Milestones, Engineering Team, and 2024 IPO Strategy Abel declines to disclose the acquisition purchase price citing confidentiality, redirecting to their target IPO valuation before answering standard rapid-fire questions.17:37–18:13 · Nathan pushing back 0/10 Episode Conclusion and Performance Highlights Closing solo monologue summarizing the guest's metrics, acquisition strategy, and revenue breakdown.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 84.9% · guest 15.1%0:00 · Nathan 84.9% · guest 15.1%3:00 · Nathan 29.9% · guest 70.1%3:00 · Nathan 29.9% · guest 70.1%6:00 · Nathan 40.2% · guest 59.8%6:00 · Nathan 40.2% · guest 59.8%9:00 · Nathan 42.6% · guest 57.4%9:00 · Nathan 42.6% · guest 57.4%12:00 · Nathan 25.6% · guest 74.4%12:00 · Nathan 25.6% · guest 74.4%15:00 · Nathan 44.4% · guest 55.6%15:00 · Nathan 44.4% · guest 55.6%18:00 · Nathan 96% · guest 4%18:00 · Nathan 96% · guest 4%
Sharpest disagreement ▶ 13:32 Abel questions investor obsession with recurring versus upfront cash

Abel pushes back on the strict preference for recurring revenue over upfront lump sums, arguing that collected cash is equally valuable regardless of timing.

 Hardest push from Nathan ▶ 7:21 Nathan refuses to count one-time implementation fees as SaaS ARR

Nathan directly objects to Abel blending one-time implementation fees into SaaS revenue, demanding a clear distinction of true recurring ARR.

 Biggest teaching moment ▶ 4:26 Abel breaks down disparate regional marketplace take rates

Abel educates Nathan on the disparity in take rates across geographies, noting China operates under two percent while Europe and the Middle East yield ten to twenty percent.

 Nathan holds their own ▶ 11:30 Nathan computes monthly run-rate across disparate revenue streams

Nathan synthesizes customer tiers and GMV take rates on the fly to deduce the business is pacing toward one million dollars per month.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
FounderPath Valuation Tool Promotional Announcement 5115 Nathan interrupts Abel's broad buzzword-laden explanation to demand specific clarification on who the sellers actually are. Abel readily complies and details the suppliers and buyers on both sides of the platform.
Monetization Framework: SaaS Subscriptions and Regional Take Rates 5313 Abel explains how regional take rates vary dramatically between China and Europe, and clarifies contract sizes up to a seven million dollar smart city deployment.
Differentiating Custom Implementation Fees from Recurring ARR 7227 Nathan forcefully calls out Abel for categorizing one-time customization fees under SaaS, drilling down until Abel clarifies the actual monthly recurring maintenance revenue.
Platform GMV Scaling and Monthly Revenue Generation 6313 Nathan runs through GMV and take rate math to calculate monthly run-rate, while Abel explains why charging nominal software fees increases merchant platform stickiness.
Multi-Year Financial Growth and $35 Million Revenue Breakdown 7324 Nathan parses the thirty-five million top line into recurring revenue versus one-time upfront payments, analyzing the acquisition strategy behind targeting one hundred million in revenue.
Bootstrapping Milestones, Engineering Team, and 2024 IPO Strategy 4124 Abel declines to disclose the acquisition purchase price citing confidentiality, redirecting to their target IPO valuation before answering standard rapid-fire questions.
Episode Conclusion and Performance Highlights 0000 Closing solo monologue summarizing the guest's metrics, acquisition strategy, and revenue breakdown.

Statements from this episode (16)

Assertion Not checkable as stated
Free D Group's take rate: under 2% in China, 10-20% in EMEA
“I mean typically, for example, if we, because actually we work with a wide range of suppliers for all the other the merchants from different markets, for example, if it's in China the other the take rate's actually quite quite, quite sad. We're talking about b…”
Abel Zhao Jan 20, 2023 ▶ 4:30
Assertion Not checkable as stated
Free D Group maintains a 10% weighted average take rate
“I would say around 10%.”
Abel Zhao Jan 20, 2023 ▶ 4:59
Assertion Not checkable as stated
Free D Group's largest enterprise contract is a $7M Korean smart city
“And then there's a big guys out there. So the governments or telcos or airports and stuff like that, that could actually go from a 100,000 dollars to all the way to seven million dollars per project. That's basically the largest one we have, which is a smart c…”
Abel Zhao Jan 20, 2023 ▶ 5:40
Assertion Not checkable as stated
Large corporations generated 60-65% of Free D Group's 2022 revenue
“From the test fee side, one time solution to right now, if you look at 20, 22 number those actually, the total large corporation state takes about 60, 65%, and then the small merchants takes about 30%.”
Abel Zhao Jan 20, 2023 ▶ 7:01
Disclosure
Free D Group's enterprise software requires 10% to 20% custom code
“For our SaaS models, for example, 80% of those actually are SaaS components. I mean, that means ready to use and ready to launch to the market, but because actually they're bigger guys, so they more or less have, they have around between 10 to 20% customizatio…”
Abel Zhao Jan 20, 2023 ▶ 7:34
Opinion
Zhao says competing in B2C travel against Greater China incumbents is suicidal
“We realized that actually what we're trying to do on the B to C side, it's kind of, especially in this part of the market, greater China area, it's suicidal. So basically we cannot compete with the big guys.”
Abel Zhao Jan 20, 2023 ▶ 9:20
Disclosure
Free D Group serves 70 to 80 paying SaaS customers globally
“Right now globally we have about 80, 70, 80.”
Abel Zhao Jan 20, 2023 ▶ 10:01
Disclosure
Free D Group processes approximately $20 million in quarterly GMV
“So last 30 days, I go for last quarter, it's around twenty million dollars.”
Abel Zhao Jan 20, 2023 ▶ 10:16
Insight
Charging SaaS fees improves enterprise customer stickiness more than free access
“Well, because actually when you're creating a SaaS feed that actually creates from the customer perspective, you don't charge them anything, actually that lowered the stickiness and then also lower the loyalty we find. And then, so when you charge them anythin…”
Abel Zhao Jan 20, 2023 ▶ 10:41
Assertion Not checkable as stated
Free D Group generated less than $2 million in 2020 revenue
“So 20 20, when we first started to switch the business model from B to C to B to B to C so we only did around less than two million dollars in revenue in 2020, because actually that's when COVID first happened.”
Abel Zhao Jan 20, 2023 ▶ 12:20
Assertion Not checkable as stated
Bootstrapped Free D Group grew revenue from $14M in 2021 to $35M
“So 20, 21, we need about fourteen million revenue. And then this year, so so we closed 20, 20 to thirty five million.”
Abel Zhao Jan 20, 2023 ▶ 12:41
Disclosure
Free D Group acquired Hong Kong's largest travel management company
“So one of those actually we acquired two companies, whether it's in based in Hong Kong, which is the largest TMC company for the greater in the markets.”
Abel Zhao Jan 20, 2023 ▶ 14:29
Prediction Not checkable as stated
Free D Group expects $100 million in 2023 revenue, 50% ARR
“So we're hoping that actually with all those strategic alignments put into place, it will help us to achieve the a hundred million revenue this year. And the amount that at least we're looking at, hoping that at least 50% of that's ARR.”
Abel Zhao Jan 20, 2023 ▶ 15:18
Prediction Didn’t hold up
Free D Group aims to IPO its travel unit at $250M+ valuation
“So for that particular entity, we're aiming to IPO in 24. So hopefully that actually gave us a but minimal IPO. We're looking at two hundred fifty million at least the evaluation.”
Abel Zhao Jan 20, 2023 ▶ 15:46
Disclosure
Free D Group is entirely bootstrapped with no outside capital
“No, we're bootstrapped.”
Abel Zhao Jan 20, 2023 ▶ 16:00
Assertion Not checkable as stated
Engineers make up 62% of Free D Group's 250 employees
“62%.”
Abel Zhao Jan 20, 2023 ▶ 16:18
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