The Exchanges

Q Yeah. Okay. So, uh, thinking maybe considering raising capital, you have any idea? I mean, just teach your audience in a series B about how much money you think about raising.

A So we did, uh, so we did a 6.2 in our series a, um, you know, if you're, if you're looking for a series B, you have to be able to take it to your next metric. So we need to sort of be able to take it to our series C metric. And generally speaking, you want to try to do that in about a two year timeframe. So we sort of reverse that back, right? You know, what is our opportunity? What do we really want to do? Where do we need to invest? So, you know, I think You know, a good solid series B. And if you look at the market today, it's anywhere between, you know, 10 to maybe 15 to twenty million dollars.

AI assessment note: “it's anywhere between, you know, 10 to maybe 15 to twenty million dollars.”

Q Who would you consider maybe your, your two or three kind of competitors that you respect the most in the space?

A Uh, that's a good question. I think, um, let me, let me put out the, uh, the standard answer first, but I think there's some legitimacy to that. The standard answer is that It's, it's the Excels or the, or the Google Sheets, uh, you know, the kind of status quo. I'm building a dashboard and I'm building it, you know, using my own stuff, right? So that's, that's kind of the way it's being done today. I think the, the other one that is probably doing the most interesting stuff is probably Microsoft's Power BI product. Uh, I think they're probably our most formidable or most close, uh, competitor. Um, But what's cool is that a, the SMB is such a massive market and there's room for multiple winners. And, um, generally we found that the Microsoft folks stick within Microsoft ecosystem and then there's everybody else. So why don't we take everybody else? I like that.

AI assessment note: “doing the most interesting stuff is probably Microsoft's Power BI product.”

Q And was there any, I mean, was there any moment, Alan, as you went through that process where you said, you know what, Maybe I take this valuation and go create some competition with my inside investors and go see if Salesforce will make an offer to match the valuation. I mean, how do you evaluate those, that thought?

A Well, the initial plan, so in the fall, when we started our road show, the initial plan was to go out and raise an external round. Um, and we actually had some amazing discussions with some top tier investors, uh, in Boston, uh, in the Valley, uh, likewise here in Canada as well. And at the end of the day, um, we got a call, um, I think this was sort of mid-November from our existing investors who said, listen, we want to do a preemptive, preemptive round. You know, we're really bullish on this, uh, and we want to, we want to continue, uh, taking this forward. So we did use market to validate, and we had, you know, actually a number of interested parties that got pretty far with us, even as the insiders were putting a, uh, putting a term sheet in place. So we did feel like we had a really good sense of what was fair, what the valuation was we were getting.

AI assessment note: “So we did use market to validate, and we had, you know, actually a number”

Q So my follow-up question to that is you, you mentioned you have had some actual acquisition offers, not, not, not offers to invest in a higher valuation, but acquisition offers by bigger companies. Is that true?

A Yeah, and I wouldn't, I wouldn't actually call them offers yet. Uh, I mean, you probably know as well as I do, it's a dance. Um, and what always happens first is you get, you get a call from usually somebody in product. So product management reaches out and, you know, they say something like, hey, we're interested in learning more about your tech and, you know, potentially we're interested in a partnership. Um, so you, you have a couple of discussions, right? And it sort of feels, uh, like it's, uh, an acquisition type of talk. But it's with the PM team, right? And then maybe it gets a little bit deeper and maybe they bring in some biz dev or some corp dev folks. And as soon as they do that, you know, it's, it's going down one path, right? And they're, they're being, you know, Interested in what the business is all about and the opportunity for an acquisition. So it doesn't always, but you know, we've had those kinds of conversations. And I think in, in every one of those conversations, you want to layer how much information you present to the, to the other company. So with every conversation, you have to be a little guarded, right? But you present a little bit more in good faith, but we've never, we've never gotten to any sort of, any sort of formal discussion where there's actually an offer on the table. Uh, We've had a lot of the, you know, the phone has been ringing, but we…

AI assessment note: “we've never gotten to any sort of formal discussion where there's actually an offer”

Q You know, so what's that? Like almost 10 X, right? You're, you're multiple. Do you ever get nervous about growing into that valuation, right? The risk is you end up for whatever isn't going Flat and you can never sell for anything where you as a common shareholder actually make money or any of your employees in the equity pool actually make money because investors get their money back first.

A Yeah. So our, our valuation multiple wasn't quite there. It was closer to, it was in between a seven and an eight, uh, which I think is about, which I think is about right. Uh, and this is, so if we were to back up some of the other VCs that we're chatting with in this process, they, they were putting terms in place that had significantly higher valuation multiples. And now the, the, the logic will say, well, we'll go for it. Right. Um, because you're, You're seeing less dilution. You're getting a bigger, bigger check, but you're right. You have to sort of be able to sustain and grow into that at the next round. So a bigger valuation multiple is not always what you want. I'm always, I'm always a big, big fan of it's gotta be fair for both parties. And that includes the terms as well, as well as the valuation multiple, you know, but you have to be able to grow into that and, you know, the next round after that. So I think you really want to, you want to choose something that you feel confident, bullish about, optimistic about, but it's not too, too much of a stretch.

AI assessment note: “you have to sort of be able to sustain and grow into that at the next round.”

Q So my follow-up question to that is you, you mentioned you have had some actual acquisition offers, not, not, not offers to invest in a higher valuation, but acquisition offers by bigger companies. Is that true?

A Yeah, and I wouldn't, I wouldn't actually call them offers yet. Uh, I mean, you probably know as well as I do, it's a dance. Um, and what always happens first is you get, you get a call from usually somebody in product. So product management reaches out and, you know, they say something like, hey, we're interested in learning more about your tech and, you know, potentially we're interested in a partnership. Um, so you, you have a couple of discussions, right? And it sort of feels, uh, like it's, uh, an acquisition type of talk. But it's with the PM team, right? And then maybe it gets a little bit deeper and maybe they bring in some biz dev or some corp dev folks. And as soon as they do that, you know, it's, it's going down one path, right? And they're, they're being, you know, Interested in what the business is all about and the opportunity for an acquisition. So it doesn't always, but you know, we've had those kinds of conversations. And I think in, in every one of those conversations, you want to layer how much information you present to the, to the other company. So with every conversation, you have to be a little guarded, right? But you present a little bit more in good faith, but we've never, we've never gotten to any sort of, any sort of formal discussion where there's actually an offer on the table. Uh, We've had a lot of the, you know, the phone has been ringing, but we…

AI assessment note: “we've never gotten to any sort of formal discussion where there's actually an offer”

Q That's right. And what will you use? I mean, you have to have a really good kind of experience. Expansion strategy into your current base to drive, again, net negative revenue churn. What's the number one driver of that currently? Is it number of seats or number of, you know, integrations or what?

A So there's a number of things. So we don't, we don't license per seat. We, we license per number of dashboards primarily. So we will get customers on, um, usually in, in a relatively small package. So something that allows them to, to prove value, to see value. And then once they've gotten to that point, maybe, and that's usually within the first, maybe two to three months. That's usually when we see them upgrading, they need more dashboards or they need more other services that we can offer them. So we really, we, we don't try to push too much stuff, uh, right out of the get go. We really want our customers to, to, to see and experience the value first. And once they're solid, that's when they start, um, moving up in, in plans and pricing.

AI assessment note: “We license per number of dashboards primarily.”

Q That's right. And what will you use? I mean, you have to have a really good kind of experience. Expansion strategy into your current base to drive, again, net negative revenue churn. What's the number one driver of that currently? Is it number of seats or number of, you know, integrations or what?

A So there's a number of things. So we don't, we don't license per seat. We, we license per number of dashboards primarily. So we will get customers on, um, usually in, in a relatively small package. So something that allows them to, to prove value, to see value. And then once they've gotten to that point, maybe, and that's usually within the first, maybe two to three months. That's usually when we see them upgrading, they need more dashboards or they need more other services that we can offer them. So we really, we, we don't try to push too much stuff, uh, right out of the get go. We really want our customers to, to, to see and experience the value first. And once they're solid, that's when they start, um, moving up in, in plans and pricing.

AI assessment note: “We, we license per number of dashboards primarily.”

Q is not interesting. And this is where I think, I think this is where Dasher failed, to be honest with you. You've got to be able to figure out like how to actually tell the CEO how to like make changes in their business based off the data. And that is so difficult to actually code because it's so subjective. How do you try and codify that in clip folio?

A Um, you know, I don't know that we necessarily codify that today. Uh, what we do is we do run a lot of webinars. Uh, we do team with a lot of sort of industry experts like, uh, like, uh, Rand Fishkin at Moz, right, to really sort of educate people on what's, what's important, and if my metric is here, what do I do? So, uh, I think eventually we'd like to, we'd like to bubble up sort of the bench best practices or, or, or the benchmark kind of data. Um, but we're not, we're not at that stage yet. I think right now it really is more of an educational, um, I don't want to say handholding, but it's an educational partnership with our customers. They really need to understand, well, if my metric is here, do I step on the gas or do I tap the brakes? Right. Um, and I think, I think right now it's education.

AI assessment note: “I don't know that we necessarily codify that today.”

Q And was there any, I mean, was there any moment, Alan, as you went through that process where you said, you know what, Maybe I take this valuation and go create some competition with my inside investors and go see if Salesforce will make an offer to match the valuation. I mean, how do you evaluate those, that thought?

A Well, the initial plan, so in the fall, when we started our road show, the initial plan was to go out and raise an external round. Um, and we actually had some amazing discussions with some top tier investors, uh, in Boston, uh, in the Valley, uh, likewise here in Canada as well. And at the end of the day, um, we got a call, um, I think this was sort of mid-November from our existing investors who said, listen, we want to do a preemptive, preemptive round. You know, we're really bullish on this, uh, and we want to, we want to continue, uh, taking this forward. So we did use market to validate, and we had, you know, actually a number of interested parties that got pretty far with us, even as the insiders were putting a, uh, putting a term sheet in place. So we did feel like we had a really good sense of what was fair, what the valuation was we were getting.

AI assessment note: “So we did use market to validate, and we had, you know, actually a number of interested parties”

Q Why did Dasharoo fail? They just raised 3.5 million bucks. They're shutting down. Why'd they fail and you win?

A You know what, there are so many reasons why a small or mid-sized business will grow or fail, and that's where we did some really smart things. I mean, they had a really good content and marketing engine. Um, you know, so I'm not close enough to where it didn't work out. Um, I know that, you know, DashRu, along with a couple of other folks, are what we would consider widget engines. So there's not a lot of, not a lot of depth to those kind of offerings. Um, you know, with Clifolio, with our offering, you can actually calculate and mash together your own metrics. And I think that's important. Uh, I think, you know, a customer will come in and they'll say, hey, I'm, I'm cool if you spoon feed me some, you know, standard templated metrics. But at some point, I don't want to modify those. I have to make those actually truly my own. So having an editor or being able to calculate and do custom stuff, it's actually pretty important. Uh, and I know the dash route didn't have that. Um, so I, you know, I'm speculating, but, uh, you know, I mean, my heart goes out to those guys. Uh, you know, I'm a small business CEO as well. Uh, in our case, we're, we're kind of cranking and growing really nicely, but it's hard.

AI assessment note: “what we would consider widget engines. So there's not a lot of depth”

Q random house actually just bought my book deal. And they are also obviously Working with him. And then I came across the Rand Fishkin dashboard. So there's a lot of, I mean, you have a lot of people using these dashboards, whether it's for Google analytics or paid Facebook ads or paid Google ads or engagement or onboarding tactics or things like that. What's the weirdest use case you have?

A Oh, the weirdest use case. Uh, you know, that's, that's a really interesting question. I don't know about weird use cases, but we do have a lot of, uh, NGOs, uh, or, or, or non-government organizations who are using it, you know, to push some of their metrics out. So the, the International Red Cross, for example, used it for all the flooding. They used it for the Zika virus. They used it for, you know, the, uh, the, the, um, um, Uh, the stuff that's happening in, in, in Africa, right? So there's a lot of information that they're sharing as well using Clickfolio, you know, that isn't really business information, but it's really important for that information to get out and get out in real time. So I don't know what the weirdest one is, but I mean, With so many dashboards, I'm sure there's all sorts of odd stuff that people are using that we haven't even dreamt of, right?

AI assessment note: “I don't know about weird use cases, but we do have a lot of, uh, NGOs”

Q Okay, good. Tell us first, what does Clipfolio do, and how do you generate revenue?

A For sure. So we're, we're totally focused on business owners that, um, mostly, you know, in small and mid-sized companies, business owners that really want to grow their companies. They really want to find out what do they need to do on a day-to-day basis so that they can better control their decisions, make, make smarter decisions, basically build better companies at the end of the day. And there's so much data that's floating around these companies today, everything from marketing data to sales data to support and services data. That keeping a, keeping sort of the pulse on what your business is doing. So the health of your business is actually pretty difficult. And what's actually more worrying is that a ton of these small and midsize business owners and managers actually are not monitoring their business on a real time basis. So they actually feel like they're not in control of what's going on. So we're really in the business of helping them, uh, figure out what, what to do, what, what metrics to monitor, how to make the best decisions. Uh, and that's, uh, that's how we do it. We sell a dashboard, uh, that brings all of that data into a single screen that really helps them make better decisions and build stronger.

AI assessment note: “We sell a dashboard, uh, that brings all of that data into a single screen”

Q Yep. What is the, so you raised twelve million, you were negotiating with people that were already in your business. What valuation were you able to negotiate?

A So we were, we were able to get a really, really nice valuation, and I mean, this is, this is where a bit of the, a bit of the interest, uh, came into play, um, so I was mentioning to you that we, uh, were lucky enough to do a preemptive round, so, which basically means that we had funding from our insiders, um, and that, that wasn't the intent moving forward, so mid-summer, when we said, let's go and raise a Series B, um, The intent was to go out and chat with, you know, the, the, the, the standard top tier investors, and, and as I mentioned, there is tons and tons of money in the system that needs to be placed. So we were getting a lot of good audience.

AI assessment note: “we were able to get a really, really nice valuation”