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Jan 11, 2019 · 19m · top-founders

1266 How To Spin a Business Out of a Public Company

Richard Rabins · 10m spoken Nathan Latka · 6m spoken
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 episode of The Top Entrepreneurs Podcast, Alpha Software CEO Richard Rabins details how he spun his company out of a public corporation, scaled its low-code mobile platform to a $5 million ARR, and built tools empowering deskless enterprise workers.

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 36.1% of the talking time here. How this is scored →

Nathan as informed peer 6.4 Guest teaching 2.0 Guest disagreement 2.6 Nathan pushing back 6.2
05100:0010:002:11–6:21 · Nathan as informed peer 6/10 Mobilizing Deskless Workers with Alpha Software Nathan actively steers the conversation away from general industry monologues and asks precise corporate spinout questions, bringing up 409A valuations and potential conflicts of interest.6:21–8:33 · Nathan as informed peer 6/10 Customer Case Studies and Server-Based Pricing When Richard gives broad qualitative case studies, Nathan repeatedly cuts in to force the discussion back to concrete pricing models and calculated ACVs.8:34–11:04 · Nathan as informed peer 7/10 Evaluating Customer Volume and ARR Metrics Nathan calculates an implied 45M ARR based on customer counts, prompting Richard to correct him with a realistic 5M to 10M range, after which Nathan audits the unit math against pricing tiers live.11:04–14:41 · Nathan as informed peer 7/10 Revenue Growth Trajectory and Gross Retention Metrics Nathan refuses Richard's vague claim of being very sticky and insists on specific dollar retention numbers, then educates Richard on the distinction between gross and net dollar retention.14:41–18:45 · Nathan as informed peer 6/10 Capital Structure, Funding History, and Distributed Team When Richard declines to disclose total capital raised, Nathan cites team research and mentions SEC public filing requirements, successfully prompting Richard to disclose the 10M figure.2:11–6:21 · Guest teaching 2/10 Mobilizing Deskless Workers with Alpha Software Nathan actively steers the conversation away from general industry monologues and asks precise corporate spinout questions, bringing up 409A valuations and potential conflicts of interest.6:21–8:33 · Guest teaching 2/10 Customer Case Studies and Server-Based Pricing When Richard gives broad qualitative case studies, Nathan repeatedly cuts in to force the discussion back to concrete pricing models and calculated ACVs.8:34–11:04 · Guest teaching 4/10 Evaluating Customer Volume and ARR Metrics Nathan calculates an implied 45M ARR based on customer counts, prompting Richard to correct him with a realistic 5M to 10M range, after which Nathan audits the unit math against pricing tiers live.11:04–14:41 · Guest teaching 1/10 Revenue Growth Trajectory and Gross Retention Metrics Nathan refuses Richard's vague claim of being very sticky and insists on specific dollar retention numbers, then educates Richard on the distinction between gross and net dollar retention.14:41–18:45 · Guest teaching 1/10 Capital Structure, Funding History, and Distributed Team When Richard declines to disclose total capital raised, Nathan cites team research and mentions SEC public filing requirements, successfully prompting Richard to disclose the 10M figure.2:11–6:21 · Guest disagreement 2/10 Mobilizing Deskless Workers with Alpha Software Nathan actively steers the conversation away from general industry monologues and asks precise corporate spinout questions, bringing up 409A valuations and potential conflicts of interest.6:21–8:33 · Guest disagreement 2/10 Customer Case Studies and Server-Based Pricing When Richard gives broad qualitative case studies, Nathan repeatedly cuts in to force the discussion back to concrete pricing models and calculated ACVs.8:34–11:04 · Guest disagreement 2/10 Evaluating Customer Volume and ARR Metrics Nathan calculates an implied 45M ARR based on customer counts, prompting Richard to correct him with a realistic 5M to 10M range, after which Nathan audits the unit math against pricing tiers live.11:04–14:41 · Guest disagreement 3/10 Revenue Growth Trajectory and Gross Retention Metrics Nathan refuses Richard's vague claim of being very sticky and insists on specific dollar retention numbers, then educates Richard on the distinction between gross and net dollar retention.14:41–18:45 · Guest disagreement 4/10 Capital Structure, Funding History, and Distributed Team When Richard declines to disclose total capital raised, Nathan cites team research and mentions SEC public filing requirements, successfully prompting Richard to disclose the 10M figure.2:11–6:21 · Nathan pushing back 5/10 Mobilizing Deskless Workers with Alpha Software Nathan actively steers the conversation away from general industry monologues and asks precise corporate spinout questions, bringing up 409A valuations and potential conflicts of interest.6:21–8:33 · Nathan pushing back 6/10 Customer Case Studies and Server-Based Pricing When Richard gives broad qualitative case studies, Nathan repeatedly cuts in to force the discussion back to concrete pricing models and calculated ACVs.8:34–11:04 · Nathan pushing back 5/10 Evaluating Customer Volume and ARR Metrics Nathan calculates an implied 45M ARR based on customer counts, prompting Richard to correct him with a realistic 5M to 10M range, after which Nathan audits the unit math against pricing tiers live.11:04–14:41 · Nathan pushing back 7/10 Revenue Growth Trajectory and Gross Retention Metrics Nathan refuses Richard's vague claim of being very sticky and insists on specific dollar retention numbers, then educates Richard on the distinction between gross and net dollar retention.14:41–18:45 · Nathan pushing back 8/10 Capital Structure, Funding History, and Distributed Team When Richard declines to disclose total capital raised, Nathan cites team research and mentions SEC public filing requirements, successfully prompting Richard to disclose the 10M figure.

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

0:00 · Nathan 72% · guest 28%0:00 · Nathan 72% · guest 28%3:00 · Nathan 22.8% · guest 77.2%3:00 · Nathan 22.8% · guest 77.2%6:00 · Nathan 18.6% · guest 81.4%6:00 · Nathan 18.6% · guest 81.4%9:00 · Nathan 40.4% · guest 59.6%9:00 · Nathan 40.4% · guest 59.6%12:00 · Nathan 21.6% · guest 78.4%12:00 · Nathan 21.6% · guest 78.4%15:00 · Nathan 31.1% · guest 68.9%15:00 · Nathan 31.1% · guest 68.9%18:00 · Nathan 51.6% · guest 48.4%18:00 · Nathan 51.6% · guest 48.4%
Sharpest disagreement ▶ 15:17 Refusal to disclose funding amounts

Richard repeatedly pushes back against Nathan's inquiries about fundraising totals, insisting the data cannot be shared or found in public SEC records.

 Hardest push from Nathan ▶ 11:43 Demanding backing for stickiness claim

Nathan directly rejects Richard's generic qualitative assertion of high retention, challenging him that founders cannot simply claim to be sticky without providing numbers.

 Biggest teaching moment ▶ 9:00 Correcting 45M ARR extrapolation

Richard corrects Nathan's extrapolation of a 45M run rate by clarifying that legacy pricing was substantially lower, setting the true range between 5M and 10M.

 Nathan holds their own ▶ 12:05 Educating guest on gross vs net retention

When Richard asks for clarification on retention definitions, Nathan explains the SaaS accounting distinction between pure renewal rates and expansion revenue.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Mobilizing Deskless Workers with Alpha Software 6225 Nathan actively steers the conversation away from general industry monologues and asks precise corporate spinout questions, bringing up 409A valuations and potential conflicts of interest.
Customer Case Studies and Server-Based Pricing 6226 When Richard gives broad qualitative case studies, Nathan repeatedly cuts in to force the discussion back to concrete pricing models and calculated ACVs.
Evaluating Customer Volume and ARR Metrics 7425 Nathan calculates an implied 45M ARR based on customer counts, prompting Richard to correct him with a realistic 5M to 10M range, after which Nathan audits the unit math against pricing tiers live.
Revenue Growth Trajectory and Gross Retention Metrics 7137 Nathan refuses Richard's vague claim of being very sticky and insists on specific dollar retention numbers, then educates Richard on the distinction between gross and net dollar retention.
Capital Structure, Funding History, and Distributed Team 6148 When Richard declines to disclose total capital raised, Nathan cites team research and mentions SEC public filing requirements, successfully prompting Richard to disclose the 10M figure.

Statements from this episode (10)

Assertion Partly supported
Rabins: 60% of enterprise workers worldwide do not work at desks
“In particular, if you think about enterprises or corporations, 60% of workers worldwide work standing up. You know, not at desks.”
Richard Rabins Jan 11, 2019 ▶ 2:21
Assertion Not publicly verifiable
Rabins: Original Alpha Software hit $25M revenue and 150 employees
“We were roughly about twenty-five million. We had about a 150 people. We sold it to a public company and then I ended up actually becoming CEO of the company that we sold it to.”
Richard Rabins Jan 11, 2019 ▶ 3:56
Assertion Not checkable as stated
Rabins: Alpha Software serves approximately 3,000 customers
“We have about 3000 customers using alpha.”
Richard Rabins Jan 11, 2019 ▶ 8:34
Assertion Not checkable as stated
Rabins: Alpha Software operates at a $5M to $10M annual run rate
“It's somewhere in the five to ten million dollar range.”
Richard Rabins Jan 11, 2019 ▶ 9:17
Assertion Not checkable as stated
Rabins: Alpha Software had minimal revenue upon spinout as an asset purchase
“No, very little. It was mainly an asset purchase. Cause in those days, software was mainly sold as perpetual licenses versus subscription.”
Richard Rabins Jan 11, 2019 ▶ 9:26
Assertion Not checkable as stated
Rabins: Alpha Software grew revenue approximately 70% year-over-year
“We probably were up by about 70% approximately.”
Richard Rabins Jan 11, 2019 ▶ 11:14
Assertion Not checkable as stated
Rabins: Alpha Software has 85% to 90% annual gross dollar retention
“Probably in the order of 85, 90%.”
Richard Rabins Jan 11, 2019 ▶ 11:57
Insight
Rabins: Mobile enterprise apps are almost always data capture and dispatch
“What we found is that when it comes to mobile the kind of app that people want to build is Almost always some form of data capture and dispatch.”
Richard Rabins Jan 11, 2019 ▶ 13:12
Disclosure
Rabins: Alpha Software has raised approximately $10 million in funding
“I mean, we've raised, you know, around about ten million dollars.”
Richard Rabins Jan 11, 2019 ▶ 15:49
Disclosure
Rabins: Alpha Software has approximately 50 employees
“There's about 50 people in the company.”
Richard Rabins Jan 11, 2019 ▶ 16:11
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