The Exchanges

Q So fast forward to streamline, right? You said this is, uh, my audience might not know what special districts means, but you cater to them. What is a special district example?

A I had never heard of them before, uh, approaching streamline actually as a, as an investor and partner before just, you know, as you said, jumping in two feet first. So special districts are everywhere, and if you own your house, I'm confident you're paying into some. You'll see it on your property tax bill. It's water districts. It's utility districts. It's libraries. It's cemeteries. It's sanitation districts. It's this really funny sort of corner of the government market that is wildly underserved, partially because it's so disparate. No one really knows how many there are. They supersede city and county boundaries. They're managing their own budgets. They're providing a singular service to a specific geographic area. Um, and so they're very hard. Most states don't even know how many districts there are.

AI assessment note: “It's water districts. It's utility districts. It's libraries. It's cemeteries. It's sanitation districts.”

Q Well, just to be clear, Adam, sorry, just to give everyone a number. So you said, I think you were about ten million dollar run rate last time we spoke. That would put you at about 12, 13 today, is that right?

A That's right, that's right, that's right. Um, so we were hoping for a little bit higher, but I think what we found is that the sales cycles this last, this year, particularly a little bit less than last year have extended. Typically our sales cycle is 60 to 90 days. A lot of deals are taking 30 to 60 days longer than that. And mostly it's not in the, the, the, uh, the, the buyers. It's the procurement. It's the legal and the compliance. Uh, a lot of those stages are taking just incredible amounts of time. Um, The client says, yes, we want to buy the tool. We've, we've, you know, the CTO, the CIO, the VP of engineering, whoever the stakeholders has said, yes, all the bureaucracy now takes another 60 days longer than it did a year ago. A lot of it's budget. A lot of it's also compliance, security, cyber, uh, GDPR and privacy. Um, a lot of things just seem to be taking longer and it's hard to move those wheels of bureaucracy. Also as I, you know, we're dealing with these large regulated industries where it's much harder to exert pressure on them because they have a cadence For buying software and validating it and doing all the, the compliance stuff that you can't really accelerate.

AI assessment note: “That's right, that's right, that's right. Um, so we were hoping for a little bit higher”

Q How did you get the first 50 people on the WhatsApp group?

A Facebook ads. Uh, so we have had a quite a journey before we came to, uh, technology. We first started with video marketing and, uh, during the video marketing phase, we really got to understand how to use Facebook ads. And in Kenya, Facebook ads are really, really affordable for as low as a hundred, uh, and 20 shillings, which is about a dollar. You can run an ad. So it was a platform for us to get to know how to target people within Kenya. Especially in different provinces, uh, because marketing in Kenya has to be really targeted depending on which community you are addressing. So during that phase, we really got to understand Facebook ads. So we just, uh, collected that, uh, information that we had, uh, did some Facebook ads for WhatsApp groups, and that's how we got our first hundred students on WhatsApp.

AI assessment note: “Facebook ads. Uh, so we have had a quite a journey”

Q Got it. Got it. Got it. Got it. Okay. So code 42 no longer has crash point. A private equity group bought that. I think it was mill point capital, right? Did a carve out there. Okay. And why get rid of that? If it was just like printing. I mean, it sounds like it was a really great business.

A It was a good business, um, but it was a declining business. And, um, and the people that you sold to in that business were, uh, IT people and you were selling to old organizations that hadn't moved to the cloud yet. So you could see the trick where that business was going to go long-term. And also we were selling now to security people. So, um, our focus is on a completely different buyer, solving a completely different problem. And one thing I would tell any entrepreneur Is you better be focused. If you want to disrupt an industry, if you want to win in the space, you can't be a, uh, you can't have lots of different products doing lots of different things. You can do that when you become bigger and your CrowdStrike or your, you know, GE or your some large company, you can, you can have lots of different products in your bag, but if you want to disrupt the market and win in that market, you better be very focused on it. So that's why we did that. It made a lot of sense for us and we sold it for two hundred and fifty million dollars. So we Yeah.

AI assessment note: “It was a good business, um, but it was a declining business.”

Q though, a company with a 120,000 employees using you, if you build them the full rate of a hundred bucks per seat, you're doing the same math I am, right? We'd love for you to be making twelve million a year on that contract. Maybe you are. What would you say the average, though, customer paying you is paying per seat? Is it more like maybe 20 per seat, 50?

A Oh, no, no. The average is closer to 80 bucks a seat. So, you know, there's, there's companies that are paying us more than that, uh, obviously, but, and there's, Companies that buy a 120,000 seats, they, they get to price. They get a better price as you would expect. So, um, it's, it's all over the map, but we have a number of multimillion dollar a year customers for sure. And, um, you know, this is a multimillion dollar problem. It's, um, our research shows that the average breeze costs an organization, sixteen million dollars. So a big company is going to pay a lot of money if they have a breach from an insider. So we're, we're a small drop in the bucket compared to that.

AI assessment note: “The average is closer to 80 bucks a seat.”

Q That's so funny, or, or zoom around or something. Um, okay, so, so what is Chaser? Maybe tell, tell us what you guys do through the eyes of how a customer is using you today.

A Totally. Yeah. So projects management software is widely broken right now. And that's because most teams don't care enough to adapt their workflow around it. You know, you don't wake up in the morning and say, I'm going to go look up what I have on Asana today. And then at night, go and mark everything you did that day. And then the next morning, do it over and over again with whatever projects management tool your team's using. And, you know, there's a hundred seventy two million people working in desk jobs who have to use project management software. A lot of them have to use it. Um, but two of three are not satisfied with their tooling, and so we're trying to solve that problem. Um, Chaser is the only project management software that only one user needs to use, and the way it works is you can delegate tasks to anybody on Chaser, um, even if they're not a user. They don't need to know what Chaser is, uh, frankly. Um, Chaser will send them the task through Slack or email, and they'll be able to see, like, okay, I've been assigned this thing, I can click here to market complete, I can click here to push back the deadline, and Chaser will Collect progress updates from them, send reminders until it's complete, and you'll be able to at all times track on your Chaser dashboard where the progress, where the status of this task is, and you can rest easy knowing Chaser's going to foll…

AI assessment note: “Chaser is the only project management software that only one user needs to use”

Q But Andre, isn't the, isn't the knowledge graph only as powerful as the data set that you feed it in the sample size of that data set? And isn't that directly, I mean, if, if, if the customer that signs up for your tool doesn't have a large data set to feed it, your knowledge graph is going to be really poor for that customer.

A Well, I mean, of course we have built a lot of tooling for enriching this graph and improving whatever data you start from. I mean, for example, we now have the ability to ingest the The Google merchant feed directly into the knowledge graph, and then we can start enhancing, you know, this merchant feed and making it better because we upscale the images, or we add additional metadata to the products, or we, you know, start to categorize product with a different taxonomy. So there is a lot of value that gets into the creation of the data inside the graph. I mean, it's not just the graph. Of course, the data that you bring in, it's, it's the first asset, but we, we have to improve it because otherwise there's no SEO value. But once we improve it, then there is not just SEO value. You have something way more valuable, which is you're going to build your AI stack on top of it.

AI assessment note: “we have built a lot of tooling for enriching this graph and improving whatever data”

Q Okay. Fair enough. So three customers, tell me about how you got your first three customers. Where'd you find them?

A Well, so the first one was, again, this was my former employer. So the idea was I left the company to build this product. And then they were the, you know, building it for that group that we were then going to take it out. So my first customer, uh, was that company. They're named Demi Learning. They're a, uh, publisher, uh, an education public K through eight education materials, uh, publisher here in Lancaster, but they have international reach, um, family business, about 50 employees. So they were the first customer. Um, the next customer came because, so it was interesting. So We spent twenty-nineteen, I got my co-founder, and we spent twenty-nineteen getting our pitch ready, and we were going to go raise money, because that's what I need.

AI assessment note: “my first customer, uh, was that company. They're named Demi Learning.”

Q literally the week, like the day or the week after I left SAS Society, I was reading that Susquehanna gave, uh, Greg up at Muckrack. They did a hundred and eighty million series A investment of which a big chunk of that was secondary for Greg. So great story for Greg. You have him speaking. What should folks expect to learn from him at SAS stock this year? Yeah. Yeah.

A No, exactly. I'm really looking forward to that. Greg's going to be a first time speaker. He's obviously, you know, flying into, to, to Dublin for this event. You know, he bootstrapped to fifty million ARR, um, which, uh, you know, again, such an impressive feat, uh, to, to, to, to do that. Right. I don't know what the percentages are of, of founders that have done that, but I'm sure it's less than one percent. Um, so, uh, that's going to be super exciting. He's going to share the, why, you know, after bootstrapping to fifty million, you know, And, and that's a great business, right? Why he took venture capital, why he did a secondary, you know, and really kind of share openly and honestly, uh, his thought process about doing that. Of course, I mean, look, you know, if somebody is going to be investing a hundred and eighty million and there's a big secondary there, it's going to be tempting, but if you've got a fifty million ARR business, right, there perhaps is no need to. We, we know that some bootstrap founders that are at like a hundred million ARR and, you know, with great profit margins that Will never sell their business, right? Because there, there, there is really no need to. So it's going to be really interesting to understand why, why Greg has done that. And I think perhaps, you know, part of it is around like faster growth. There is the secondary part, but faster gr…

AI assessment note: “He's going to share the, why, you know, after bootstrapping to fifty million”

Q Mm-hmm. Mm-hmm. That's a great group. And, and, um, these are like, if people join, they get access to a dashboard. And then there's basically a list of events coming up and they can pick which ones they want to attend, or how does it actually work once you're inside?

A Yeah, it's, it's more than that. I would almost like take the tech out of it, right? The, the, the tech that nobody, like the tech isn't, isn't that important. Like they, they join because they want to be a part of a group of founders like themselves who are scaling to ten million in revenue. Right. Uh, and, and with that, we then put them into a smaller groups of flight five, six, seven people, uh, That, uh, that are either, let's say they're going from five to ten million in revenue or one to five million in revenue. We put them in that group, uh, and then they meet on a monthly basis and go through, uh, uh, an agenda that we've kind of curated for them, uh, and to help them, you know, progress their, their business and, you know, unstick them. Uh, and then we do like regular, like online workshops for them and we get great people cause we've got a great network that we've built out through our, uh, uh, event side of the business. Uh, and so they get access to, uh, You know, we had Amir Orad from Sisense kind of come in and do a, you know, Chatham House Rules kind of session and just really just answer questions and people are like, wow, this is great. You know, like that you can bring people like this in and help us. And then we do these annual retreats. So we went to Amalfi. You joined us on that one in.

AI assessment note: “we then put them into a smaller groups of flight five, six, seven people”

Q How many side events last year were you able to count those up anyway?

A Like there was about 17, 18, uh, that we knew. So these are, these are events that we're, we're not running. Right. Uh, and so it's like, uh, Northstone, you know, who are a venture capital partner, um, you know, one of the leading VCs in Europe. Uh, they did like a paddle boarding event for founders down the river Liffey in, in, in Dublin. And I was a little bit like, where are all these founders going? I saw Oivind from, uh, whereby, you know, leaving the conference at like 11 AM on the first day. And I'm like, where are you going? It's like, oh, I'm off to a paddleboarding event, but I'm like, well, we're trying to keep everybody in the venue. There are all these things that are happening. And like, even I know the other VCs, they do like little, um, you know, content sessions kind of in hotels and venues, you know, around the RDS. So they're pulling a little bit, uh, you know, people out of the conference venue, which, you know, to some, some partners, you know, might not be the best thing, but I guess we're at that volume now that it doesn't really affect too much. If 30, 40 people kind of leave You're not going to feel that.

AI assessment note: “Like there was about 17, 18, uh, that we knew.”

Q I pulled out a couple I'm excited about, and I'm hoping you can maybe give us a tease on what we can expect from them. I think air call is potentially a great IPO candidate in 20, 24, over one hundred and thirty million dollars of revenue. You've landed Jonathan with the co-founders to speak. What can we expect from him and what stage is he on? Do you know?

A Yeah, I, I really like, uh, Jonathan's on the scale stage, um, and I had to double check. Uh, it's the biggest stage, yeah, uh, and really that's for the companies like Aircall, uh, obviously their Aircall was, uh, I think, you know, classified as a centaur, you know, a company that's doing a hundred million in revenue. I think you said now it's like a 130. Uh, I've had Aircall on, on, you know, our podcasts when they were probably, I think, series A, uh, and obviously, you know, we've kind of followed their journey over the years, uh, you know, as, as Sastoc and, Uh, themselves has, has grown, right? But they've obviously grown a lot, a lot faster. Uh, I had to check Jonathan was still coming because he's left air call. He's still the co-founder of course, but he's left air call. And now he's, he's set up like, uh, uh, an investment fund for property. So he's now into hotels and car parks and things like that. And I was like, is he still going to be interested in speaking in a SAS conference? Uh, but he is obviously he's got 10 years of lessons, right? From building out air call, being the co-founder, uh, I think he was the COO at one point, but he was also really kind of responsible for building out their, you know, initial go to market kind of motion. Right. Um, and he's actually going to be sharing how, you know, the playbook of how they built their sales go to market motio…

AI assessment note: “Jonathan's on the scale stage... he's actually going to be sharing how, you know, the playbook”

Q And Yuval, what do these companies, these hotels pay you on average per month or per year to use the tech?

A Currently it's around 85 dollars per month. Uh, when we started, uh, back in 2007, it was higher. You know, and the monthly, um, average price per hotel dropped since then because we focused more on the low market as we went, you know, as we, um, as we evolved, you know, um, more focused because we started in Israel, uh, mainly in Israel and later on in Argentina. And we work with bigger hotels, you know, like the three stars or, um, in Israel, it was boutiques, you know, but, um, as time, um, passed by, we decided to focus more on the low market and more like, uh, international global markets, you know, so we have clients in 70 countries today.

AI assessment note: “Currently it's around 85 dollars per month.”

Q How bad was it when you had flatlined at a million and you looked at equity term sheets? What valuation cut were you looking at?

A Uh, I hadn't even tested the market. I was, uh, kind of concerned that this was a tweener, like not, not quite a failure, but not quite a series A type business. Um, and, uh, I just needed more, more runway. Uh, and so, uh, through a combination of, uh, you know, myself putting in, sorry, sorry, uh, going, going back with With FounderPath for, uh, when I was non-volitive, initially it was about a 400 K loan. You know, we had over a million in revenue, so that's, you know, 400 K is like, you know, less than 40% of, of, uh, a month's, um, of ARR. Um, and then I, I put an equal amount of, of, of capital in, uh, you know, just to, um, To, to gross that up a little bit, uh, and that provided, you know, almost a full year of, of, uh, of time to fully develop and show progress against this new ICP and new, new use case, uh, and, you know, growing the business to, you know, over two million in revenue and, you know, getting a lot of interest, uh, in, in, in the business, uh, from, from investors and, and eventually, uh, doing our, our series A.

AI assessment note: “Uh, I hadn't even tested the market.”

Q And, and we had a, how many, how many engineers at the time?

A We only had like four people at the time, four engineers working on the product. And I had, I think maybe, you know, three, three kind of customer success and salespeople that we kept part time to go into the trenches with our customers. Um, so keeping product development stronger in that time and like, you know, going into the crisis with our customers, it allowed us to, I mean, it really accelerated our impact on the industry. And then on the other side of the Pandemic. We've, you know, five X our revenue since the bottom of the trough. We also didn't turn a lot during the pandemic, which I think was a major testament to the technology. Like we, we went in with, um, let's call it a 120 customers. And we, and we came out with, of those a 120, we, we came out with, you know, a solid a hundred of them. Like we didn't, we didn't see much churn.

AI assessment note: “We only had like four people at the time, four engineers working on the product.”

Q So what, what would it take for you to quit the full-time gig and go all in here? Because you have competitors to your point working and trying to kill you that are all in.

A Yeah. So for me, I think our goal for the end of the year is to reach about 20 K and MRR. That's our big like goal. I think we're making a lot of progress over there and that can be, it doesn't necessarily have to be a hundred percent, 20 K MRR. It could be 20 K and net volume sales. Like I said, we're already done month to date, 3400 this month. Uh, so that would get me to move in full time. Although we are trying to be a little bit smarter about how we allocate our capital. And I'm really big on capital. Uh, Allocation capital efficiency. So we are actually working with a lot of creators as well to kind of promote the product and kind of create some of that growth as well to kind of basically subsidize the fact that we are not able to put in full-time work yet into it.

AI assessment note: “our goal for the end of the year is to reach about 20 K and MRR”

Q Sorry. What was it between 20, uh, between 2008 and 20 13 if it wasn't SAS already?

A So the company was originally in the loss prevention business, but it was, uh, uh, about visually verifying, uh, suspect transactions. So, uh, the way the product was deployed is, uh, was in a, uh, uh, server and we were largely focused, focused on grocers at the time. So basically the, the, the companies would use, uh, a printout or a file out of their POS system or their exception based reporting system. And then they would turn to Agilence to visually verify. So a very video centric company. The idea was to enable an analyst sitting in headquarters to be able to review transactions across the chain of grocery stores, essentially visually determining whether there was something amiss in those transactions. But it was a hardware oriented business. I tried to make it a recurring model by providing

AI assessment note: “the company was originally in the loss prevention business... it was a hardware oriented business”

Q Interesting. How do you split up the deal flow? Is it geo-based? Is it industry-based? How do you split that up?

A A little bit of both. So we make a, a, a delineation between, uh, retail and restaurants. The use cases are, are significantly different in restaurants and, and even there's sub sub segments in there, right? In restaurants is quick service restaurants, but there's also table service restaurants. So the use cases can vary significantly on the retail side. Um, we have a, we have a segmentation around, uh, Um, grocery, specialty, drug stores, those are the three, three, and we're, we're starting to do more with convenience stores now as well. Uh, but basically we break it down. Uh, the, the salespeople are assigned, uh, there it's account assigned. So we, we spend our energy today with the largest accounts in terms of account executives. And then outside of the sales organization, we have a, you know, marketing team that looks to get people to self-identify in the mid, in the mid range. And we do a little bit at the low end, but most of it is in mid range.

AI assessment note: “A little bit of both. So we make a, a, a delineation between, uh, retail and restaurants.”

Q Explain to me how the take rate works. If I'm a B to B SaaS company, I use Monite's power in app invoicing and invoices for a hundred bucks. It gets paid. How much is Monite going to take for that?

A Yeah, I think it depends on a specific arrangement, right? But we use, for example, stripe rails in the background for invoice payment links. And then there is basically the cost of acquiring money on the cards. So depending on specifics of like which card it is, et cetera, our take rates could be like zero. It could be negative. It could be a few percentage points. The most important thing is that we give a fixed take rate to our partners. So for example, who would give them payment for whatever, like 2.6% blended rates. And they would say to their client, look, it costs just three percent each payment, which is the market standard that QuickBooks charges. And then they would always earn .4. And so what we do is we fix their earnings, but our earnings really depend on how much transaction costs. And we run our own risk in that regard.

AI assessment note: “our earnings really depend on how much transaction costs. And we run our own risk”

Q Sorry, not formation, technique to stay in the formation. So you're going down two miles and across two miles. What's the most popular?

A Geosteering. They call it, there's directional drilling and geosteering is what guides directional drilling. And so the geosteer is usually trained in, in geology, you know, reads, uh, measurements that they take down hole, and he sort of uses his, um, intuition and his knowledge, and historically, uh, uses some desktop computer assistance, but also is the seat of his pants to keep the well, you know, in the target formation, and this has worked pretty great for the last 20 years. It's, It's not that it's, uh, failing, but it turns out that, that there's a big, it's a big stress on an individual having to do this job, and so every 20 minutes, you get some new measurements in, and you've got to You've got to read some, uh, wiggly lines on a screen that are measurements and figure out what that means as far as the geology, and then, you know, if you make a wrong decision, you've steered your wellbore out of the productive zone and possibly into a hazard that could cause you to, you know, a very expensive sidetrack, so it's a high-stress Uh, decision that people have been making.

AI assessment note: “Geosteering. They call it, there's directional drilling and geosteering is what guides directional drilling.”

Q That's great. Well, congrats on, congrats on the, on the growth. Where were you exactly one year ago in terms of MRR? So we can calculate growth rate.

A Um, let's say about a thousand. Um, but like six months ago, we were also at a thousand. Like the thing is with this market, because there's also obviously it's a crowded market. We spent the entire first year focusing on product market fit, interviewing hundreds of users for averaging about five years interviews per week since we launched. And we just keep that going because that feedback is very valuable. So only in January this year, we switched to growth. So also in January, 23, we were still at about a thousand. Uh, dollars MRR. Uh, and since then we switched, uh, switched, uh, uh, focus. We moved on towards growth, started utilizing our own product because it was good enough to actually start, start selling for us. And hence we found product market fit because then it means that it would also be good enough for our users. And that's why we've been, uh, growing 50% month over month.

AI assessment note: “let's say about a thousand”

Q Were you quitting PMG or, or, or where were you, like, where'd you experience this problem?

A We have a very unique kind of, uh, backstory where, uh, we were solving a lot of problems at PMG, um, with internal technology, um, where we were doing things like automating bids, automating budgets, ad creation, um, turning things on and off based on inventory files and stuff like that. And, uh, we were templatizing this to be able to run it across all of the like fortune a thousand clients that PMG worked with. And we realized that there were much larger use cases than just the marketing side. Um, for all the data and the automation that we were putting in place. And so Shipyard is actually the, uh, like child product of something that was built at PMG. Uh, we ended up splitting things off, um, and spinning the technology out on its own to focus on a totally different sort of, uh, ICP of your typical data engineer, analytics engineer, uh, and everything else there, because we felt like with the massive amount of growth in the data ecosystem, that was something that we wanted to make sure we could capitalize on and help those teams, um, be able to build workflows more effectively.

AI assessment note: “we were solving a lot of problems at PMG, um, with internal technology”

Q Okay, and Darren, give me more of the backstory here. What year did you launch the company?

A Yeah, it's pretty fascinating. Um, my, my background is actually in music. I used to be a professional musician in my twenties, and then I started a record label, and then that, uh, that kind of was a bit of a tough go in 2007, so I started my first SaaS company, which was A back-end logistics management platform for music festivals and cultural events, and we started off with a lot of smaller towns, sort of, you know, Canadian events, and then eventually we ended up working with some of the biggest music festivals in the world, so by 2014, 2015, we were the, we were the back-end tools for Bonnaroo, Coachella, Burning Man, Just for Laughs Festival, X Games, like just a pile of really massive events in several different countries.

AI assessment note: “in 2007, so I started my first SaaS company”

Q What are the most common outdated APIs people are using today that you compete with?

A Um, so we have, uh, Sovereign, um, you have Offinda, which they're like in the middle. They're not that bad. And then you have Archili, um, also not that bad. Sovereign is horrible, and they are a market leader. And with horrible, I mean, they can't extract data, so they can't read non-Word or PDF resumes. So what happens is, is that 30% of candidates who apply for a job, they get rejected not based on their skills, Or their resume, but because the technology can't read their resume. So you might be maybe a good fit for the job, but you got rejected, and nobody knows that you just slid through the cracks, or you don't even know that maybe you were good for that job, and you start to look somewhere else. So that's a major problem. So all HR tech startups, I love what they're doing, but what they're doing is putting a band-aid on a system that is inherently broken, and we're trying to fix that.

AI assessment note: “we have, uh, Sovereign, um, you have Offinda... And then you have Archili”

Q That's very impressive. Okay, so did you have a partner, like, were you a hundred percent owner of WorkSandy?

A No, so, um, I had a co-founder at WorkSandy. We had started the business together in 2017, and as I was saying, we got to the end of last year and looked at ourselves and said, we've got two different business models in play, um, we've got a successful business here, but we know that there's an opportunity to grow this side of the business, and I've always been really interested in scalable technology, like, you know, I've been in the Bay Area for 13 years, you don't spend that much time there without... Try something yourself. Um, and, you know, we made the decision that I was going to take the tech side, um, and spin that out, and he, um, the trade-off is that for the IP, Sandy and my co-founder have a little bit of equity on the cap table with Team Era. Oh, I see. And, you know, and in exchange, I left the cap table of Sandy, um, with a little bit of an exit clause that if that business ever gets acquired or sold, then I get to see a little piece of that pie. I see. Ultimately.

AI assessment note: “No, so, um, I had a co-founder at WorkSandy.”

Q is a green cover. If you're looking it up on Amazon, the entrepreneurs essential. So you can look up and we'll certainly link to that in the show notes and promote this and we send it out. But, but that that's great. Um, give us the, give us the on bizarre voice. Just give us some of the snippets real quick. So like what year did you launch the business?

A So Bizarre Voice, um, I launched it with Brant Barden in 2005. And to put that in a historical context, there were only three retailers who had customer reviews at the time, um, in the entire United States. And, um, we Um, launched, I think two years before the iPhone, Facebook was closed to the public. There was no such thing as Snapchat or Instagram or TikTok. Um, so there's this entire social wave that was about to come and that really accelerated the business at Bizarre Voice because Facebook came along and said to all the brands and all the retailers, you need to be social. You need to be social. You need to be social. And of course they had invented the world's best ad targeting engine up until Um, when Apple changed their roles and, and really broke that, that, uh, that engine pretty profoundly. Um, but you know, here we were in the right time, right place. And I always say that entrepreneurship is a combination of a lot of grit and a lot of luck. And anybody that says there's no luck in it, they're absolutely wrong. There's a tremendous amount of luck needed to become a successful entrepreneur.

AI assessment note: “I launched it with Brant Barden in 2005.”

Q Okay, so you basically, also, that takes a lot of discipline. I mean, this thing, it's growing, it's thirty million AR, you go, man, I'm just feeling so compelled by this bizarre voice thing. Did you have trusted lieutenants at Cormetrics, maybe co-founders, then that sort of gave you extra, you know, comfort to leave?

A Yeah, actually, I left with Brant Barden, who became my co-founder, and it was, it was a little bit of an awkward scenario because Brant, um, approached me at CoreMetrics and said, hey, I'm going to go start another company at some point, and I'm wondering if you'd be on my board of directors. And Brant was absolutely amazing on our client services team. He led, um, really one of the most difficult parts of the SaaS model, which is to Make sure that you're doing a great job of servicing your customers. I always say you have to constantly be re-earning their trust, um, as a SaaS company because it's a recurring revenue business. So you've got to stress that last S software as a service and really make sure you're providing great service. So anyways, I was, I was, I was fascinated with how, um, great Brent was at his job. And when he first said this to me, I thought, well, gee, I don't want to lose him. But then I thought I'm a real hypocrite if I don't meet with him about this. And then when I met with him, he said, Hey, would you like to brainstorm with me too? I could really use a brainstorming partner. And we brainstormed and we came up with bizarre voice. And then I realized, or I really felt deep in my bones that the market timing for that was so compelling and that it was such a big vision and it could be a bigger company than core metrics that I thought to myself, I've go…

AI assessment note: “Yeah, actually, I left with Brant Barden, who became my co-founder”

Q So to repeat the question, would it have been easier to do the transformation if Saab took the company private first and then did all the changes?

A So I thought about that a lot, and I actually think the answer would be no, and I'll tell you why. The operational changes were extreme. We replaced almost the entire management team, you know, we shipped a bunch of jobs offshore, did a lot of crazy stuff, but, um, the capital markets allowed us to finance it in a really aggressive way that would be very hard privately. To give you an example, you know, the market cap of the company when we took over was a couple hundred million dollars. Our first financing was eighty million dollars. That's very hard to do privately in a convert, Um, and so that allowed us to make these huge, you know, the product we took over, you know, I mentioned that the customer NPS was -60, because there's a lot, there was a stability issue. We were a software company that had 40 versions, so it's like we were cloud, but we weren't really cloud. We, we, you know, our gross margins on the SAS was 40%, because we had, DevOps costs have gone out of control, because you have 40 versions, it's hard to deploy. All that stuff. And so we need to do a massive rebuild of the product. Um, it would have been easier to do the operational work privately, but to finance it, I don't know how we would have I think, yes and no. And then later, I think a lot of our success was sort of buying these, these businesses, integrating them quickly, um, and, uh, you know, so there…

AI assessment note: “I actually think the answer would be no, and I'll tell you why.”

Q Wait, sorry, can you give a context? When you joined, how much

A Oh, so the business, I think, was a 180 hundred million of revenue, but only five million of software revenue, so it was, it was really a hardware and services business that was growing, trying to become a software business, and so I joined the board, and within, you know, two months-ish, it, it, it was very clear the company was challenged, um, so it had this software product, which was point of sale software for enterprise restaurants, so you go to Sweetgreen, you go to Arby's, five guys, you'd see this product, and that business was growing really fast, 50, 75% a year, um, and so that was the idea, which was like, oh, you're a SaaS guy, join our board, you'll teach us how to do SaaS, and we'll figure it out, and so I was like, okay, that sounds easy. But, you know, I got there, and, um, you know, within a few weeks, you know, we had two activist hedge funds come in, demand to sell the company, say a lot of nasty stuff. You can still Google it. It's pretty nasty. Uh, we had, um, a bunch of financial proprietories, so we were under investigation by the SEC, the DOJ, uh, and, and I, the moment I joined the board, I got all these angry emails from customers, and I was like, well, that's weird. I'm not even, like, running the company. So I went to the board and said, hey, I know I'm the, you know, the thirty-year-old. Can I go meet the management team and understand what's happen…

AI assessment note: “the business, I think, was a 180 hundred million of revenue, but only five”

Q Deals like this die a thousand deaths before they close. Take us into the war pact. Tell me, tell me all the times this deal almost died. Why did it almost die? What were the terms?

A Well, There were two really critical pieces. Critical piece number one was really getting to an agreement on the fit. Again, that was really important to us. How would we be working with the different departments And you know, the, the kind of the bottom line was, uh, gee, I can go to anyone and get surveys now. How am I going to deal with getting just a question pro survey tool? Are we going to be able to be open for existing clients because they all have different tools, including question pro or are we going to be closed? Right? So it was important to me to stay open, but then, uh, when, when appropriate cross sell the question pro tools, because that was really an important thing. Uh, from an integration perspective. And then, uh, the second piece was a very interesting one that I think a lot of startups have. We are a qualified SB-twelve-o-two company, which in short terms means that we incorporated under the terms that if we stayed in business for five years and then we sold under this particular incorporation phase, we had no capital gains for any of the shareholders. Now, that's really sweet for the person who is selling the company. Unfortunately, buyers are set up so that they want to do an asset purchase, and an asset purchase then results in a 50% capital gains cost for the sellers. So, interestingly enough, our tax code is not designed to be particularly conducive …

AI assessment note: “There were two really critical pieces. Critical piece number one was really getting to an agreement”