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Apr 24, 2020 · 22m · top-founders

1735 Smarter to Buy vs Build, He bought Company for $10m, Now doing $20m in ARR 3 years later

Brad Miller · 11m spoken Nathan Latka · 8m 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 Brad Miller, CEO of Awareness Technologies, on acquiring an under-monetized security software business for $10 million and converting its perpetual licensing model into a $20 million ARR SaaS enterprise. The discussion highlights capital-efficient B2B growth, strong EBITDA margins, non-dilutive bank debt financing, and customer retention metrics.

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 42% of the talking time here. How this is scored →

Nathan as informed peer 4.3 Guest teaching 1.9 Guest disagreement 1.1 Nathan pushing back 1.9
05100:0010:0020:000:00–4:07 · Nathan as informed peer 4/10 Podcast Schedule Updates and iTunes Review Call to Action Nathan introduces the interview and immediately begins clarifying the core mechanics of Brad's security software and SaaS pricing model across B2B and consumer lines.4:07–8:41 · Nathan as informed peer 5/10 SaaS Transition Strategy and the 2010 Business Acquisition Nathan explores the mechanics of Brad's 2010 acquisition, quickly identifying the opportunity in converting a one-time license product into a recurring SaaS model.8:41–11:41 · Nathan as informed peer 4/10 Consumer versus B2B Customer Dynamics and Market Evolution Brad explains how consumer mobile transitions forced technological pivots and how corporate enterprise deals are becoming the growth driver.11:43–16:27 · Nathan as informed peer 7/10 Sponsor Announcement: HostGator Website Hosting Solutions Nathan names specialized SaaS debt providers to challenge why a traditional local bank would lend millions, prompting Brad to explain the power of bottom-line profitability.16:28–18:53 · Nathan as informed peer 7/10 Customer Retention Rates, Payback Period, and Overall Valuation Nathan demonstrates high analytical expertise by rapidly calculating Awareness Technologies' total ARR ($20M) and free cash flow ($6M) based on segment percentages and EBITDA margins.18:54–21:32 · Nathan as informed peer 3/10 The Famous Five Rapid-Fire Questions with Brad Miller Brad politely corrects Nathan after being accidentally called David multiple times before wrapping up the rapid-fire questions.21:34–22:22 · Nathan as informed peer 0/10 Episode Conclusion and Key Performance Metrics Summary Nathan delivers a solo closing monologue recapping the company's financial metrics and acquisition background.0:00–4:07 · Guest teaching 1/10 Podcast Schedule Updates and iTunes Review Call to Action Nathan introduces the interview and immediately begins clarifying the core mechanics of Brad's security software and SaaS pricing model across B2B and consumer lines.4:07–8:41 · Guest teaching 2/10 SaaS Transition Strategy and the 2010 Business Acquisition Nathan explores the mechanics of Brad's 2010 acquisition, quickly identifying the opportunity in converting a one-time license product into a recurring SaaS model.8:41–11:41 · Guest teaching 2/10 Consumer versus B2B Customer Dynamics and Market Evolution Brad explains how consumer mobile transitions forced technological pivots and how corporate enterprise deals are becoming the growth driver.11:43–16:27 · Guest teaching 3/10 Sponsor Announcement: HostGator Website Hosting Solutions Nathan names specialized SaaS debt providers to challenge why a traditional local bank would lend millions, prompting Brad to explain the power of bottom-line profitability.16:28–18:53 · Guest teaching 1/10 Customer Retention Rates, Payback Period, and Overall Valuation Nathan demonstrates high analytical expertise by rapidly calculating Awareness Technologies' total ARR ($20M) and free cash flow ($6M) based on segment percentages and EBITDA margins.18:54–21:32 · Guest teaching 4/10 The Famous Five Rapid-Fire Questions with Brad Miller Brad politely corrects Nathan after being accidentally called David multiple times before wrapping up the rapid-fire questions.21:34–22:22 · Guest teaching 0/10 Episode Conclusion and Key Performance Metrics Summary Nathan delivers a solo closing monologue recapping the company's financial metrics and acquisition background.0:00–4:07 · Guest disagreement 1/10 Podcast Schedule Updates and iTunes Review Call to Action Nathan introduces the interview and immediately begins clarifying the core mechanics of Brad's security software and SaaS pricing model across B2B and consumer lines.4:07–8:41 · Guest disagreement 1/10 SaaS Transition Strategy and the 2010 Business Acquisition Nathan explores the mechanics of Brad's 2010 acquisition, quickly identifying the opportunity in converting a one-time license product into a recurring SaaS model.8:41–11:41 · Guest disagreement 1/10 Consumer versus B2B Customer Dynamics and Market Evolution Brad explains how consumer mobile transitions forced technological pivots and how corporate enterprise deals are becoming the growth driver.11:43–16:27 · Guest disagreement 2/10 Sponsor Announcement: HostGator Website Hosting Solutions Nathan names specialized SaaS debt providers to challenge why a traditional local bank would lend millions, prompting Brad to explain the power of bottom-line profitability.16:28–18:53 · Guest disagreement 1/10 Customer Retention Rates, Payback Period, and Overall Valuation Nathan demonstrates high analytical expertise by rapidly calculating Awareness Technologies' total ARR ($20M) and free cash flow ($6M) based on segment percentages and EBITDA margins.18:54–21:32 · Guest disagreement 2/10 The Famous Five Rapid-Fire Questions with Brad Miller Brad politely corrects Nathan after being accidentally called David multiple times before wrapping up the rapid-fire questions.21:34–22:22 · Guest disagreement 0/10 Episode Conclusion and Key Performance Metrics Summary Nathan delivers a solo closing monologue recapping the company's financial metrics and acquisition background.0:00–4:07 · Nathan pushing back 2/10 Podcast Schedule Updates and iTunes Review Call to Action Nathan introduces the interview and immediately begins clarifying the core mechanics of Brad's security software and SaaS pricing model across B2B and consumer lines.4:07–8:41 · Nathan pushing back 2/10 SaaS Transition Strategy and the 2010 Business Acquisition Nathan explores the mechanics of Brad's 2010 acquisition, quickly identifying the opportunity in converting a one-time license product into a recurring SaaS model.8:41–11:41 · Nathan pushing back 2/10 Consumer versus B2B Customer Dynamics and Market Evolution Brad explains how consumer mobile transitions forced technological pivots and how corporate enterprise deals are becoming the growth driver.11:43–16:27 · Nathan pushing back 4/10 Sponsor Announcement: HostGator Website Hosting Solutions Nathan names specialized SaaS debt providers to challenge why a traditional local bank would lend millions, prompting Brad to explain the power of bottom-line profitability.16:28–18:53 · Nathan pushing back 2/10 Customer Retention Rates, Payback Period, and Overall Valuation Nathan demonstrates high analytical expertise by rapidly calculating Awareness Technologies' total ARR ($20M) and free cash flow ($6M) based on segment percentages and EBITDA margins.18:54–21:32 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions with Brad Miller Brad politely corrects Nathan after being accidentally called David multiple times before wrapping up the rapid-fire questions.21:34–22:22 · Nathan pushing back 0/10 Episode Conclusion and Key Performance Metrics Summary Nathan delivers a solo closing monologue recapping the company's financial metrics and acquisition background.

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

0:00 · Nathan 75.9% · guest 24.1%0:00 · Nathan 75.9% · guest 24.1%3:00 · Nathan 35% · guest 65%3:00 · Nathan 35% · guest 65%6:00 · Nathan 20.3% · guest 79.7%6:00 · Nathan 20.3% · guest 79.7%9:00 · Nathan 29% · guest 71%9:00 · Nathan 29% · guest 71%12:00 · Nathan 52.9% · guest 47.1%12:00 · Nathan 52.9% · guest 47.1%15:00 · Nathan 28.6% · guest 71.4%15:00 · Nathan 28.6% · guest 71.4%18:00 · Nathan 37.6% · guest 62.4%18:00 · Nathan 37.6% · guest 62.4%21:00 · Nathan 69.1% · guest 30.9%21:00 · Nathan 69.1% · guest 30.9%
Sharpest disagreement ▶ 18:58 Brad gently calls out wrong name

Brad interrupts the Famous Five opener to point out that Nathan has repeatedly been calling him David instead of Brad.

 Hardest push from Nathan ▶ 14:29 Pushback on bank debt mechanism

Nathan challenges Brad on why a conventional local savings bank would lend without hard collateral when specialized SaaS lenders typically fill that niche.

 Biggest teaching moment ▶ 14:43 Brad clarifies bank appetite for profitable SaaS

Brad explains that traditional banks will happily lend without SaaS specialized funds when a tech business generates 30% bottom-line EBITDA margin.

 Nathan holds their own ▶ 18:27 Nathan does instant enterprise valuation math

Nathan pieces together previous data points to instantly compute Brad's total $20M revenue and $6M annual free cash flow, earning praise from the guest.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Podcast Schedule Updates and iTunes Review Call to Action 4112 Nathan introduces the interview and immediately begins clarifying the core mechanics of Brad's security software and SaaS pricing model across B2B and consumer lines.
SaaS Transition Strategy and the 2010 Business Acquisition 5212 Nathan explores the mechanics of Brad's 2010 acquisition, quickly identifying the opportunity in converting a one-time license product into a recurring SaaS model.
Consumer versus B2B Customer Dynamics and Market Evolution 4212 Brad explains how consumer mobile transitions forced technological pivots and how corporate enterprise deals are becoming the growth driver.
Sponsor Announcement: HostGator Website Hosting Solutions 7324 Nathan names specialized SaaS debt providers to challenge why a traditional local bank would lend millions, prompting Brad to explain the power of bottom-line profitability.
Customer Retention Rates, Payback Period, and Overall Valuation 7112 Nathan demonstrates high analytical expertise by rapidly calculating Awareness Technologies' total ARR ($20M) and free cash flow ($6M) based on segment percentages and EBITDA margins.
The Famous Five Rapid-Fire Questions with Brad Miller 3421 Brad politely corrects Nathan after being accidentally called David multiple times before wrapping up the rapid-fire questions.
Episode Conclusion and Key Performance Metrics Summary 0000 Nathan delivers a solo closing monologue recapping the company's financial metrics and acquisition background.

Statements from this episode (11)

Opinion
Miller: Unmonitored departing employees often steal client lists and pricing data
“When I go to find my next job, chances are I will pull off a client list and all the information about what they have, how much they pay, when they're up for renewal and that would be devastating to a company if their employees, when they left to go to a compe…”
Brad Miller Apr 24, 2020 ▶ 3:07
Insight
Miller: Most high-damage security incidents are caused by internal employees
“While most of the problems that exist are created by external people, most of the problems that cause a lot of damage are done by internal people”
Brad Miller Apr 24, 2020 ▶ 6:09
Assertion Not checkable as stated
Miller acquired Awareness Technologies at $10M valuation on $4M-$5M revenue
“Well at the time we probably you know, valued it at about ten million. It was doing about four or five million in revenue.”
Brad Miller Apr 24, 2020 ▶ 7:35
Assertion Not checkable as stated
Renewals now account for 50% of Awareness Technologies' revenue
“We saw an opportunity to change that model, which we did, and very, you know, very quickly, and now renewals makes up, you know, at, you know, 50% of the revenue”
Brad Miller Apr 24, 2020 ▶ 7:54
Assertion Not checkable as stated
Awareness Technologies has a couple hundred thousand active paying consumer accounts
“But at any one time, you know, we probably have a couple 100,000 Consumers, you know, paying us either, you know, monthly, quarterly, or annually. Who have active, active licenses.”
Brad Miller Apr 24, 2020 ▶ 9:07
Assertion Not checkable as stated
Awareness Technologies has approximately 5,000 corporate B2B customers
“The corporate side of the business probably has more like 5000 customers.”
Brad Miller Apr 24, 2020 ▶ 9:37
Assertion Not checkable as stated
Awareness Technologies generates approximately 75% of its revenue from consumers
“Probably 75, 25, consumer.”
Brad Miller Apr 24, 2020 ▶ 10:46
Assertion Not checkable as stated
Awareness Technologies operates at a net profit margin of over 30%
“We were profitable. We were very profitable. We're, you know, we're dropping 30 plus percent to the bottom line.”
Brad Miller Apr 24, 2020 ▶ 14:56
Disclosure
Awareness Technologies acquired a UK business for over $3M
“When we bought the company in the UK we bought it for a little over three million, and we already had a million of debt at the time.”
Brad Miller Apr 24, 2020 ▶ 15:36
Assertion Not checkable as stated
Awareness Technologies achieves 80% annual retention in its B2B segment
“And there, you know, the churn is, you know, our retention is, you know, like 80%.”
Brad Miller Apr 24, 2020 ▶ 16:50
Disclosure
Awareness Technologies spends one dollar in CAC per dollar of ARR
“You know, we spend a dollar to get a dollar.”
Brad Miller Apr 24, 2020 ▶ 17:36
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