Jun 29, 2021 · 26m · top-founders
What Happened: Only $7k in Bank, Now $4.5m ARR, 100% YoY Growth
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this interview with Nathan Latka, Blackthorn.io founder Chris Feddersfield explains how his company overcame near-bankruptcy with only $7,000 in the bank to scale past $4.5 million in ARR through product focus, Salesforce AppExchange distribution, and non-dilutive financing.
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 36% of the talking time here. How this is scored →
Nathan as informed peer 6.3 Guest teaching 3.9 Guest disagreement 2.5 Nathan pushing back 3.8
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 22:13 Rejecting the hype-cycle exit narrative
Chris firmly rejects Nathan's assertion that he should sell during the frothy event market, stating that more millions make no difference compared to seeing what they can build.
Hardest push from Nathan ▶ 22:03 Nathan presses on market timing and frothy valuationsNathan directly challenges Chris's decision to hold, arguing that frothy comps like Hopin mean a smart business person would sell at the top and laugh to the bank.
Biggest teaching moment ▶ 14:30 Technical realities of payment gatewaysChris disabuses Nathan of the simplistic financial assumption that volume alone provides pricing leverage, explaining real-world engineering constraints like webhook reconciliation and EMV SDKs.
Nathan holds their own ▶ 19:26 Nathan deconstructs Capchase cost of capitalNathan cites direct industry knowledge of Capchase's debt facility with i80 and typical discount rates to assess the terms of Chris's non-dilutive financing.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Salesforce Ecosystem Dynamics: The Dragon's Blessing and Curse | 6 | 3 | 2 | 2 | Nathan digs into the Salesforce ecosystem dynamics and ARR metrics, noting the risk of riding on the platform. Chris details the fee structure (15% take rate) and how their customer base is distributed between events and payments. | |
| Payment Engine Architecture and Stripe Partnership Strategy | 7 | 5 | 3 | 4 | Nathan benchmarks payment transaction multiples against market comps like Bill.com/Divvy. Chris corrects Nathan regarding the economic distinction between low-margin ACH volume and lucrative card volume. | |
| The 2018 Near-Death Crisis and Strategic Product Pruning | 6 | 3 | 1 | 3 | Nathan inquires about the pivot from custom services to SaaS licensing model. Chris recounts having just $7k in the bank in late 2018 and pruning five non-core products to focus solely on events and payments. | |
| Customer Economics and Gateway Revenue Share Agreements | 6 | 4 | 2 | 4 | Nathan presses on customer economics, ACVs, and undisclosed gateway rev share take rates. Chris clarifies how behind-the-scenes gateway revenue shares work while protecting NDA details. | |
| Gateway Bargaining Power versus Technical Complexities | 6 | 6 | 4 | 4 | Nathan argues that higher GMV should give Blackthorn bargaining leverage to renegotiate gateway margins. Chris pushes back on this theoretical leverage, explaining the massive technical complexities like reconciliation webhooks and mobile SDKs that make switching impractical. | |
| Scaling via Non-Dilutive Capchase Financing and Hiring Plan | 7 | 3 | 3 | 5 | Nathan reveals his competing venture FounderPath and evaluates Capchase's lending terms and cost of capital. Chris justifies the 12-month payback structure to avoid paying excess fees over a longer duration. | |
| Valuation Benchmarks, Exit Inquiries, and Philanthropic Ambition | 7 | 5 | 4 | 6 | Nathan strongly challenges Chris on why he didn't sell into the peak frothy event SaaS market. Chris holds firm, explaining that his primary life objective is growing the ARR to $35M to fund a charitable foundation rather than timing an immediate exit. | |
| Operational Metrics, Famous Five, and Concluding Thoughts | 5 | 2 | 1 | 2 | Nathan rapidly checks headcount, gross/net retention numbers, and runs through the Famous Five questionnaire, ending with an open personal revelation from Chris regarding his bipolar diagnosis. |
Statements from this episode (25)
Blackthorn integrates exclusively with Salesforce as its system of record
“Salesforce is our system of record and the only database we integrate with.”
Blackthorn Reached $4.5M ARR With Only Two Outbound Deals Closed
“We're at four and a half million ARR. I think to date we've had two outbound deals, Close.”
Blackthorn pays 15 percent of its licensing fees back to Salesforce
“The curse side is we pay 15% of our licensing fees back to back to the dragon.”
Blackthorn expects to hit $5 million in ARR next month
“Four and a half, but we have a couple of things going. So I think we'll be at five by the end of next month.”
Blackthorn reached $700K ARR in mid-2019 after fixing its sales process
“We brought on Cesar DeVoto who fixed our sales process. So we had 700 K ARR then. In mid 2019.”
Blackthorn ended 2020 at $3.6M ARR and targets $7.2M for 2021
“I think it was 3.6. And I think our goal for end of this year is 7.2. Cause we're trying to do a hundred percent year over year.”
Tony Robbins uses Blackthorn to process event registration payments
“Tony Robbins uses us. You call them up to do an event registration, but the payment goes through our payments app.”
Blackthorn expects to reach $1B in cumulative payment volume in 2021
“We might hit a billion in aggregate this year from inception.”
Acquirers pay 18x to 22x multiples on payment gateway revenue share
“I've heard the multiple they give on, on, Gateway revenue share volume is 18 to 22 X, which is, you know, obviously enormous.”
Blackthorn survived 2018 with just $7,000 in the bank and seven employees
“At the end of 2018, we almost died. We had like seven came the bank account. We had seven people. I think people took voluntary Pay deductions.”
Blackthorn killed five parallel products in 2018 to focus purely on events
“And at the time we were building five other products, all of which we killed at one time and decided to focus on events as a layer that would sit on top of payments.”
Blackthorn's events and payments apps generate roughly equal revenue
“And now they're both growing equally. I think The revenue lines are about equal.”
Blackthorn's annual contract values range from $8,000 to $50,000
“So, and we have a lot of legacy customers too, but it ranges anywhere from like eight K to 50 K regularly, maybe 12 K average, something like that.”
Software vendors driving payment gateway volume receive revenue share agreements
“So when you have volume going through any gateway, basically every company has some agreement with the gateway to get some kind of mutual funding that goes back and forth, like authorized.net has one. Braintree has one. PayPal has one. They all have one. So ev…”
Blackthorn gave 6% equity to LAUNCH Accelerator for a $100K investment
“Their agreement is pretty standard. They're six percent for a hundred K.”
Blackthorn was rejected by roughly 100 investors during early fundraising
“Yeah, I pitched something like a hundred investors and every single one of them said no, partly because I'm not very good at sales, partly because our vision wasn't nailed down.”
Blackthorn employees invested $180,000 of their own money in late 2019
“Well, we had an employee round and they bought like another 180 K.”
Blackthorn's monthly expenses are approximately $450,000 to $490,000
“Our monthly expense now is like four 5490 K.”
Capchase debt financing saves Blackthorn over $18M compared to equity dilution
“I think I did some rough math. I think over the next two and a half to three years, we're going to pay them upwards of two million. Whereas if we did a dilutive round now at exit, that dilution would be minimum, twenty million, like bare minimum.”
Blackthorn's Capchase financing agreement features a 12-month payback period
“No, it's still a 12 month payback.”
Blackthorn received loose acquisition inquiries ranging from $45M to $50M
“If I had to guess I had loose inquiries coming around 45 to 50, but”
Blackthorn targets $35M ARR by June 2024 through 100% YoY growth
“See, I gave the team a goal of hitting 35 ARR by June, 20, 24, which gives three years of a hundred percent year over year.”