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Jan 27, 2016 · 26m · top-founders

How to Build SaaS Company in Small Biz Space, Sell for $30m With Jay Bean

Jay Bean · 14m spoken Nathan Latka · 9m spoken
0:00 / 0:00

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Host Nathan Latka interviews serial entrepreneur Jay Bean, examining his journey scaling and exiting companies like aha.com and Orange Soda, managing startup financial risk, and building his latest SMB SaaS platform, Fresh Lime.

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 38.4% of the talking time here. How this is scored →

Nathan as informed peer 4.6 Guest teaching 2.4 Guest disagreement 0.8 Nathan pushing back 3.0
05100:0010:0020:000:58–5:45 · Nathan as informed peer 6/10 Introducing Serial Entrepreneur Jay Bean Nathan digs into the revenue mechanics of aha.com and probes on acquisition multiples, contrasting recurring SaaS revenue with professional services. Jay readily details his deal structure and affirms Nathan's market observations.5:45–9:15 · Nathan as informed peer 5/10 Scaling and Selling Orange Soda to Deluxe Corporation Nathan quickly runs the ARPU and customer count math to deduce Orange Soda's run rate. Jay openly shares metrics about the company's $30M acquisition by Deluxe and the $11.5M raised.9:15–16:01 · Nathan as informed peer 4/10 Leaving Corporate Security and Navigating Startup Risks Nathan presses Jay to reveal his actual executive salary at Deluxe to contextualize opportunity cost. Jay candidly provides the range and shares extreme startup risk stories like carrying $500k in credit card debt.16:01–21:38 · Nathan as informed peer 6/10 Fresh Lime: Marketing Attribution and SMB SaaS Metrics Nathan immediately catches a mathematical discrepancy between customer count and annual revenue run rate, prompting Jay to clarify one-time setup fees versus MRR. Jay breaks down customer lifetime value and churn rates.21:40–25:39 · Nathan as informed peer 2/10 Sponsor Spotlight: Growth Geeks and Podcast Promotion Nathan runs through his sponsor ad and standard 'Famous Five' rapid-fire format. Jay provides direct, succinct answers regarding his book recommendations, habits, and career advice.0:58–5:45 · Guest teaching 3/10 Introducing Serial Entrepreneur Jay Bean Nathan digs into the revenue mechanics of aha.com and probes on acquisition multiples, contrasting recurring SaaS revenue with professional services. Jay readily details his deal structure and affirms Nathan's market observations.5:45–9:15 · Guest teaching 3/10 Scaling and Selling Orange Soda to Deluxe Corporation Nathan quickly runs the ARPU and customer count math to deduce Orange Soda's run rate. Jay openly shares metrics about the company's $30M acquisition by Deluxe and the $11.5M raised.9:15–16:01 · Guest teaching 2/10 Leaving Corporate Security and Navigating Startup Risks Nathan presses Jay to reveal his actual executive salary at Deluxe to contextualize opportunity cost. Jay candidly provides the range and shares extreme startup risk stories like carrying $500k in credit card debt.16:01–21:38 · Guest teaching 3/10 Fresh Lime: Marketing Attribution and SMB SaaS Metrics Nathan immediately catches a mathematical discrepancy between customer count and annual revenue run rate, prompting Jay to clarify one-time setup fees versus MRR. Jay breaks down customer lifetime value and churn rates.21:40–25:39 · Guest teaching 1/10 Sponsor Spotlight: Growth Geeks and Podcast Promotion Nathan runs through his sponsor ad and standard 'Famous Five' rapid-fire format. Jay provides direct, succinct answers regarding his book recommendations, habits, and career advice.0:58–5:45 · Guest disagreement 1/10 Introducing Serial Entrepreneur Jay Bean Nathan digs into the revenue mechanics of aha.com and probes on acquisition multiples, contrasting recurring SaaS revenue with professional services. Jay readily details his deal structure and affirms Nathan's market observations.5:45–9:15 · Guest disagreement 1/10 Scaling and Selling Orange Soda to Deluxe Corporation Nathan quickly runs the ARPU and customer count math to deduce Orange Soda's run rate. Jay openly shares metrics about the company's $30M acquisition by Deluxe and the $11.5M raised.9:15–16:01 · Guest disagreement 1/10 Leaving Corporate Security and Navigating Startup Risks Nathan presses Jay to reveal his actual executive salary at Deluxe to contextualize opportunity cost. Jay candidly provides the range and shares extreme startup risk stories like carrying $500k in credit card debt.16:01–21:38 · Guest disagreement 1/10 Fresh Lime: Marketing Attribution and SMB SaaS Metrics Nathan immediately catches a mathematical discrepancy between customer count and annual revenue run rate, prompting Jay to clarify one-time setup fees versus MRR. Jay breaks down customer lifetime value and churn rates.21:40–25:39 · Guest disagreement 0/10 Sponsor Spotlight: Growth Geeks and Podcast Promotion Nathan runs through his sponsor ad and standard 'Famous Five' rapid-fire format. Jay provides direct, succinct answers regarding his book recommendations, habits, and career advice.0:58–5:45 · Nathan pushing back 3/10 Introducing Serial Entrepreneur Jay Bean Nathan digs into the revenue mechanics of aha.com and probes on acquisition multiples, contrasting recurring SaaS revenue with professional services. Jay readily details his deal structure and affirms Nathan's market observations.5:45–9:15 · Nathan pushing back 2/10 Scaling and Selling Orange Soda to Deluxe Corporation Nathan quickly runs the ARPU and customer count math to deduce Orange Soda's run rate. Jay openly shares metrics about the company's $30M acquisition by Deluxe and the $11.5M raised.9:15–16:01 · Nathan pushing back 5/10 Leaving Corporate Security and Navigating Startup Risks Nathan presses Jay to reveal his actual executive salary at Deluxe to contextualize opportunity cost. Jay candidly provides the range and shares extreme startup risk stories like carrying $500k in credit card debt.16:01–21:38 · Nathan pushing back 4/10 Fresh Lime: Marketing Attribution and SMB SaaS Metrics Nathan immediately catches a mathematical discrepancy between customer count and annual revenue run rate, prompting Jay to clarify one-time setup fees versus MRR. Jay breaks down customer lifetime value and churn rates.21:40–25:39 · Nathan pushing back 1/10 Sponsor Spotlight: Growth Geeks and Podcast Promotion Nathan runs through his sponsor ad and standard 'Famous Five' rapid-fire format. Jay provides direct, succinct answers regarding his book recommendations, habits, and career advice.

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

0:00 · Nathan 75.1% · guest 24.9%0:00 · Nathan 75.1% · guest 24.9%3:00 · Nathan 40% · guest 60%3:00 · Nathan 40% · guest 60%6:00 · Nathan 24.9% · guest 75.1%6:00 · Nathan 24.9% · guest 75.1%9:00 · Nathan 29.3% · guest 70.7%9:00 · Nathan 29.3% · guest 70.7%12:00 · Nathan 31.3% · guest 68.7%12:00 · Nathan 31.3% · guest 68.7%15:00 · Nathan 13.7% · guest 86.3%15:00 · Nathan 13.7% · guest 86.3%18:00 · Nathan 21.4% · guest 78.6%18:00 · Nathan 21.4% · guest 78.6%21:00 · Nathan 60.5% · guest 39.5%21:00 · Nathan 60.5% · guest 39.5%24:00 · Nathan 54.6% · guest 45.4%24:00 · Nathan 54.6% · guest 45.4%
Sharpest disagreement ▶ 11:11 Jay initially declines to state exact corporate salary

Jay mildly pushes back against giving his specific salary figure before Nathan presses him to provide a broad range.

 Hardest push from Nathan ▶ 11:20 Nathan demands executive salary range

Nathan refuses to let the guest dodge the exact compensation question and demands Jay give at least a broad range.

 Biggest teaching moment ▶ 4:49 Jay explains multiple compression on service-heavy revenue

Jay explains why companies with heavy service components take massive hits on acquisition multiples compared to pure software.

 Nathan holds their own ▶ 19:19 Nathan identifies implementation fee revenue discrepancy

Nathan does instant mental math on customer volume versus projected annual run rate, forcing Jay to account for setup fees.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Serial Entrepreneur Jay Bean 6313 Nathan digs into the revenue mechanics of aha.com and probes on acquisition multiples, contrasting recurring SaaS revenue with professional services. Jay readily details his deal structure and affirms Nathan's market observations.
Scaling and Selling Orange Soda to Deluxe Corporation 5312 Nathan quickly runs the ARPU and customer count math to deduce Orange Soda's run rate. Jay openly shares metrics about the company's $30M acquisition by Deluxe and the $11.5M raised.
Leaving Corporate Security and Navigating Startup Risks 4215 Nathan presses Jay to reveal his actual executive salary at Deluxe to contextualize opportunity cost. Jay candidly provides the range and shares extreme startup risk stories like carrying $500k in credit card debt.
Fresh Lime: Marketing Attribution and SMB SaaS Metrics 6314 Nathan immediately catches a mathematical discrepancy between customer count and annual revenue run rate, prompting Jay to clarify one-time setup fees versus MRR. Jay breaks down customer lifetime value and churn rates.
Sponsor Spotlight: Growth Geeks and Podcast Promotion 2101 Nathan runs through his sponsor ad and standard 'Famous Five' rapid-fire format. Jay provides direct, succinct answers regarding his book recommendations, habits, and career advice.

Statements from this episode (12)

Assertion Contradicted
Bean: Aha.com scaled to $35M run rate in three years
“We actually built a great little business that grew in three years from startup to about a thirty five million dollar run rate before it was acquired.”
Jay Bean Jan 27, 2016 ▶ 2:33
Assertion Not checkable as stated
Bean: Aha.com had 40,000 SMB advertisers, paid 50% to distribution
“I mean, we had about 40,000 small business advertisers. About half the revenue was actually paid out to our distribution partners”
Jay Bean Jan 27, 2016 ▶ 2:51
Assertion Not checkable as stated
Bean: Aha.com investors achieved an estimated 15x return
“The overall return for our investors was probably, I don't know, 15 X.”
Jay Bean Jan 27, 2016 ▶ 3:23
Insight
Bean: Service-heavy software businesses take large valuation multiple hits
“Anything that has a service component that is a little bit more service than software. You take a huge hit on, on kind of that, that multiple”
Jay Bean Jan 27, 2016 ▶ 5:12
Assertion Partly supported
Bean: Deluxe acquired Orange Soda for $28M to $30M plus stock
“Orange soda was acquired for about 28, thirty million, somewhere in there. Plus there's obviously stock and other things for the internal guys”
Jay Bean Jan 27, 2016 ▶ 8:08
Assertion Supported
Bean: Orange Soda raised $11.5M compared to under $3M for aha.com
“Orange soda, we raised about 11 and a half million. AHA, I had raised about less than three.”
Jay Bean Jan 27, 2016 ▶ 8:35
Disclosure
Bean: Deluxe Corp chief strategy officer salary was $250K to $350K
“Two 50 to three 50. I mean, somewhere in there.”
Jay Bean Jan 27, 2016 ▶ 11:28
Disclosure
Bean: Took zero salary for four years between his startup ventures
“Between aha and orange soda, I essentially went for four years with making zero dollars.”
Jay Bean Jan 27, 2016 ▶ 11:40
Disclosure
Bean: Carried over $500K in personal credit card debt for startups
“I've had times where I've had Well, more than a half million dollars on, on credit cards.”
Jay Bean Jan 27, 2016 ▶ 14:34
Disclosure
Bean: Orange Soda floated Google ad payments on credit cards for runway
“In orange soda's case, I mean, yeah, We were, we would just use credit card to help us float our Google payments and other things. Well, so it gave you 60 days of extra runway on without raising more money.”
Jay Bean Jan 27, 2016 ▶ 14:54
Prediction Not checkable as stated
Bean: Fresh Lime targets a $4M to $5M run rate by 2017
“Our revenue this year is pretty low. I mean, we'll do about two 50 next year by this time, I mean, we'll have a, Probably a, I don't know, a four or five million dollar run rate. I mean, we'll grow that much next year”
Jay Bean Jan 27, 2016 ▶ 18:55
Assertion Not checkable as stated
Bean: Fresh Lime reports a 5 percent monthly SMB churn rate
“It's probably about a five percent churn rate.”
Jay Bean Jan 27, 2016 ▶ 21:34
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