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Nov 9, 2022 · 21m · top-founders

Partnering with an ERP as an OEM VAR-deal terms, code ownership, exit value impact?

Charlie Fritsch · 16m spoken Nathan Latka · 1m spoken
0:00 / 0:00

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

At the Founder 500 conference, Charlie Fritsch explains how he built and scaled Hotel Investor Apps by partnering with an ERP provider as an OEM, detailing contract negotiation tactics, tech stack consolidation, and the capital efficiency of vertical SaaS.

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 9.3% of the talking time here. How this is scored →

Nathan as informed peer 0.0 Guest teaching 0.0 Guest disagreement 0.0 Nathan pushing back 0.0
05100:0010:0020:000:59–3:11 · Nathan as informed peer 0/10 Charlie Fritsch's Industry Background and Software Origin Nathan introduces the speaker Charlie Fritsch from the Founder 500 conference, and Charlie begins his presentation on his 25-year hotel real estate background and software origin.3:11–7:57 · Nathan as informed peer 0/10 OEM vs. VAR Models and Partnership Basics Solo presentation where Charlie educates the audience on the structural differences between original equipment manufacturers (OEM) and value-added resellers (VAR) when building on top of ERP platforms.7:57–10:31 · Nathan as informed peer 0/10 Selecting Acumatica and Negotiating OEM Deal Terms Charlie explains why his company chose Acumatica over other mid-market ERPs and walks through contract terms such as revenue splits, royalties, and development time concessions.10:31–14:21 · Nathan as informed peer 0/10 Mid-Roll Promo: Founderpath Valuation Tool Nathan delivers a mid-roll advertisement for Founderpath's valuation tool before the recording cuts back to Charlie discussing fee splits and IP ownership.14:22–16:30 · Nathan as informed peer 0/10 Consolidating Hotel Tech Stack Fragmentation into a Unified Platform Charlie illustrates the complex multi-vendor tech stack commonly used by hotel operators and presents his consolidated OEM solution built on Acumatica and AWS QuickSight.16:30–20:15 · Nathan as informed peer 0/10 Revenue Projections and QuickSight Labor Analytics Demonstration Charlie presents revenue projections, outlines labor analytics tooling in AWS QuickSight, and addresses investor questions regarding exit valuations for OEM-based software companies.0:59–3:11 · Guest teaching 0/10 Charlie Fritsch's Industry Background and Software Origin Nathan introduces the speaker Charlie Fritsch from the Founder 500 conference, and Charlie begins his presentation on his 25-year hotel real estate background and software origin.3:11–7:57 · Guest teaching 0/10 OEM vs. VAR Models and Partnership Basics Solo presentation where Charlie educates the audience on the structural differences between original equipment manufacturers (OEM) and value-added resellers (VAR) when building on top of ERP platforms.7:57–10:31 · Guest teaching 0/10 Selecting Acumatica and Negotiating OEM Deal Terms Charlie explains why his company chose Acumatica over other mid-market ERPs and walks through contract terms such as revenue splits, royalties, and development time concessions.10:31–14:21 · Guest teaching 0/10 Mid-Roll Promo: Founderpath Valuation Tool Nathan delivers a mid-roll advertisement for Founderpath's valuation tool before the recording cuts back to Charlie discussing fee splits and IP ownership.14:22–16:30 · Guest teaching 0/10 Consolidating Hotel Tech Stack Fragmentation into a Unified Platform Charlie illustrates the complex multi-vendor tech stack commonly used by hotel operators and presents his consolidated OEM solution built on Acumatica and AWS QuickSight.16:30–20:15 · Guest teaching 0/10 Revenue Projections and QuickSight Labor Analytics Demonstration Charlie presents revenue projections, outlines labor analytics tooling in AWS QuickSight, and addresses investor questions regarding exit valuations for OEM-based software companies.0:59–3:11 · Guest disagreement 0/10 Charlie Fritsch's Industry Background and Software Origin Nathan introduces the speaker Charlie Fritsch from the Founder 500 conference, and Charlie begins his presentation on his 25-year hotel real estate background and software origin.3:11–7:57 · Guest disagreement 0/10 OEM vs. VAR Models and Partnership Basics Solo presentation where Charlie educates the audience on the structural differences between original equipment manufacturers (OEM) and value-added resellers (VAR) when building on top of ERP platforms.7:57–10:31 · Guest disagreement 0/10 Selecting Acumatica and Negotiating OEM Deal Terms Charlie explains why his company chose Acumatica over other mid-market ERPs and walks through contract terms such as revenue splits, royalties, and development time concessions.10:31–14:21 · Guest disagreement 0/10 Mid-Roll Promo: Founderpath Valuation Tool Nathan delivers a mid-roll advertisement for Founderpath's valuation tool before the recording cuts back to Charlie discussing fee splits and IP ownership.14:22–16:30 · Guest disagreement 0/10 Consolidating Hotel Tech Stack Fragmentation into a Unified Platform Charlie illustrates the complex multi-vendor tech stack commonly used by hotel operators and presents his consolidated OEM solution built on Acumatica and AWS QuickSight.16:30–20:15 · Guest disagreement 0/10 Revenue Projections and QuickSight Labor Analytics Demonstration Charlie presents revenue projections, outlines labor analytics tooling in AWS QuickSight, and addresses investor questions regarding exit valuations for OEM-based software companies.0:59–3:11 · Nathan pushing back 0/10 Charlie Fritsch's Industry Background and Software Origin Nathan introduces the speaker Charlie Fritsch from the Founder 500 conference, and Charlie begins his presentation on his 25-year hotel real estate background and software origin.3:11–7:57 · Nathan pushing back 0/10 OEM vs. VAR Models and Partnership Basics Solo presentation where Charlie educates the audience on the structural differences between original equipment manufacturers (OEM) and value-added resellers (VAR) when building on top of ERP platforms.7:57–10:31 · Nathan pushing back 0/10 Selecting Acumatica and Negotiating OEM Deal Terms Charlie explains why his company chose Acumatica over other mid-market ERPs and walks through contract terms such as revenue splits, royalties, and development time concessions.10:31–14:21 · Nathan pushing back 0/10 Mid-Roll Promo: Founderpath Valuation Tool Nathan delivers a mid-roll advertisement for Founderpath's valuation tool before the recording cuts back to Charlie discussing fee splits and IP ownership.14:22–16:30 · Nathan pushing back 0/10 Consolidating Hotel Tech Stack Fragmentation into a Unified Platform Charlie illustrates the complex multi-vendor tech stack commonly used by hotel operators and presents his consolidated OEM solution built on Acumatica and AWS QuickSight.16:30–20:15 · Nathan pushing back 0/10 Revenue Projections and QuickSight Labor Analytics Demonstration Charlie presents revenue projections, outlines labor analytics tooling in AWS QuickSight, and addresses investor questions regarding exit valuations for OEM-based software companies.

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

0:00 · Nathan 34.2% · guest 65.8%0:00 · Nathan 34.2% · guest 65.8%3:00 · Nathan 0% · guest 100%3:00 · Nathan 0% · guest 100%6:00 · Nathan 0% · guest 100%6:00 · Nathan 0% · guest 100%9:00 · Nathan 31.3% · guest 68.7%9:00 · Nathan 31.3% · guest 68.7%12:00 · Nathan 0% · guest 100%12:00 · Nathan 0% · guest 100%15:00 · Nathan 0% · guest 100%15:00 · Nathan 0% · guest 100%18:00 · Nathan 1.2% · guest 98.8%18:00 · Nathan 1.2% · guest 98.8%21:00 · Nathan 0% · guest 100%21:00 · Nathan 0% · guest 100%
Sharpest disagreement ▶ 19:00 Refuting investor discount concerns for OEM software

Charlie firmly pushes back against the premise that building on an external ERP negatively impacts investor valuation or company exit pricing.

 Hardest push from Nathan ▶ 0:00 Nathan mandates visual data reporting

Nathan establishes strict conference presentation guidelines, noting he required every founder to present real revenue charts and artifacts.

 Biggest teaching moment ▶ 3:35 Explaining OEM IP ownership versus VAR reselling

Charlie instructs the room on how OEM partners retain underlying custom code ownership and negotiate superior economics compared to standard VAR partners.

 Nathan holds their own ▶ 10:31 Nathan promotes SaaS valuation metrics

Nathan leverages Founderpath transaction data across 253 deals to explain how software founders can negotiate higher multiples and lower dilution.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Charlie Fritsch's Industry Background and Software Origin 0000 Nathan introduces the speaker Charlie Fritsch from the Founder 500 conference, and Charlie begins his presentation on his 25-year hotel real estate background and software origin.
OEM vs. VAR Models and Partnership Basics 0000 Solo presentation where Charlie educates the audience on the structural differences between original equipment manufacturers (OEM) and value-added resellers (VAR) when building on top of ERP platforms.
Selecting Acumatica and Negotiating OEM Deal Terms 0000 Charlie explains why his company chose Acumatica over other mid-market ERPs and walks through contract terms such as revenue splits, royalties, and development time concessions.
Mid-Roll Promo: Founderpath Valuation Tool 0000 Nathan delivers a mid-roll advertisement for Founderpath's valuation tool before the recording cuts back to Charlie discussing fee splits and IP ownership.
Consolidating Hotel Tech Stack Fragmentation into a Unified Platform 0000 Charlie illustrates the complex multi-vendor tech stack commonly used by hotel operators and presents his consolidated OEM solution built on Acumatica and AWS QuickSight.
Revenue Projections and QuickSight Labor Analytics Demonstration 0000 Charlie presents revenue projections, outlines labor analytics tooling in AWS QuickSight, and addresses investor questions regarding exit valuations for OEM-based software companies.

Statements from this episode (11)

Insight
Fritsch: Build accounting platforms on existing ERPs rather than from scratch
“An accounting platform is, is, ah, daunting to build from scratch, so look at building on top of an existing ERP.”
Charlie Fritsch Nov 9, 2022 ▶ 2:27
Assertion Not checkable as stated
Standalone hotel accounting software lacks the broad integrations of ERP platforms
“So in our world, in the hotel space, we compete with hotel-specific accounting programs, but they're not ERPs, and so they don't have a broad integration with lots of other software that you can take advantage of on an ERP.”
Charlie Fritsch Nov 9, 2022 ▶ 5:38
Insight
Fritsch: ERP OEMs own code and keep higher splits despite minimum royalties
“So, with an OA, being an OEM, you own your own code, you own what you create, but obviously you don't own the ERP platform Product. Ah, a value added reseller provides configuration and training, ah, and support on an ERP, but they don't generally write any or…”
Charlie Fritsch Nov 9, 2022 ▶ 6:46
Insight
Fritsch: OEM partners capture 70-80% revenue splits versus 40-50% for VARs
“Typical VAR split is fifty-fifty up to that. It actually, a value-added reseller may only get 40% of the revenue. Whereas original equipment manufacturer can get, oh 70 to 80% depending on volumes.”
Charlie Fritsch Nov 9, 2022 ▶ 9:31
Insight
Fritsch: Negotiate development time before ERP minimum royalty payments begin
“When you're starting, it's going to take more time than you think. So try to get as much time prior to starting minimum royalty payments.”
Charlie Fritsch Nov 9, 2022 ▶ 10:04
Disclosure
Hotel Investor Apps pays ERP royalties on SaaS fees, not implementation
“We don't pay, ah, any revenue to the ERP, ah, from our implementation and training fees. We only pay on the monthly SAS fee.”
Charlie Fritsch Nov 9, 2022 ▶ 11:28
Insight
Fritsch: Negotiate flat minimum royalty commitments with your ERP vendors
“You want to avoid escalating minimum royalties and have a flat minimum royalty of course and as minimal, as low as you can go”
Charlie Fritsch Nov 9, 2022 ▶ 12:21
Prediction Not checkable as stated
Hotel Investor Apps expects upselling BI tools to triple hotel customer ACV
“So we have some business intelligence tools that we're now just beginning to sell to our same customer base to double, potentially triple, The annual contract value that we have from each, ah, hotel that we sell.”
Charlie Fritsch Nov 9, 2022 ▶ 14:07
Prediction Not checkable as stated
Fritsch predicts BI revenue will surpass accounting software revenue by 2024
“Next year and the year after, the revenue from our business intelligence applications are gonna equal or exceed the, ah, the accounting piece.”
Charlie Fritsch Nov 9, 2022 ▶ 17:06
Assertion Not checkable as stated
Fritsch: Investors do not discount valuations for software built on OEM ERPs
“Ah, so far all of the investor companies I've spoken to, that hasn't been a factor.”
Charlie Fritsch Nov 9, 2022 ▶ 19:39
Insight
Fritsch: Building software on top of an ERP enables leaner engineering
“Ah, and again, we can operate a little bit leaner, because we are built on top of an ERP, and then we host on AWS.”
Charlie Fritsch Nov 9, 2022 ▶ 20:54
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