SaaS Interviews with CEOs, Startups, Founders
1198 He's done $2b in Transaction Volume, Here's How he Pitches
04 Nov 2018
Chapter 1: What is Oren Klaff's background and experience in capital markets?
He started off helping companies buy, sell all kinds of debt, capital equity, you name it. He's been there, $2 billion in transaction volume. A lot of people have seen his work and said in 2014, you got to write a book. McGraw-Hill picked him up, books called Pitch Anything, done very well, over a million copies sold.
Now, obviously, continuing to do work around pitches and helping people pitch on multi-billion dollar deals. Also continuing with the investment banking work, doing several hundred million dollars per year there in transaction volume. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
Chapter 2: How did Oren Klaff's book 'Pitch Anything' come to be?
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Oren Klaff.
He has lots of experience in securities markets, ranging from capital raising, advisory leadership. He's currently a director of capital markets at Investment Bank Intersection Capital, where he manages its capital raising platform.
Chapter 3: What strategies does Oren use to pitch multi-billion dollar deals?
Since 2005, he's grown the firm to about $2 billion in aggregate trade volume across a diversified portfolio of companies and transactions. He's responsible for business development and product development and oversees the firm's flagship product, Velocity Method of Corporate Finance.
He's also a number one best-selling business author of the McGraw-Hill publication, Pitch Anything, an innovative method for presenting, persuading, and winning the deal. Oren, are you ready to take us to the top?
I am, I'm not sure I'm ever ready, but I do a good job once I get rolling.
So I have to tell you all the, you know, we have a very sophisticated audience, VCs, private equity. They're going to go, if this guy, Oren has a 2 billion in transaction volume, what the hell is he doing? Wasting time on a book?
Yeah. Well, cause I got a half basis point, uh, in, uh, in cleared fees. So that's why. No, um, you can't, if you have shitty fees, you can't make it up in volume. Right. As you may know. So so listen, I worked for many years in the capital markets. At that point, we probably had five or six hundred million in aggregate volume in 2008. As you know, how fun that was.
Or tell people just so people understand when you say aggregate volume, you're saying you're buying, you're helping people buy and sell companies. You did about that much in transaction volume.
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Chapter 4: What challenges did Oren face while writing his book?
Right, in actual debt, equity, mezz, money marbles and chalk, as we like to call it, come in. And you clip along the way in those transactions, varying amounts. Sometimes you get 7%, sometimes you get 100 basis points, but you try and keep something left over and keep moving on by buying and selling companies, by buying and selling real estate,
buying and selling assets and trying to keep some for the good guys. So anyway, and then the 2008 came and you could not raise debt. Most of our deals required debt and we just all started looking for something fun, interesting way to spend our time rather than being sad and Miserable.
And so you decided to write a book.
And so what happened was you decided, well, I didn't really decide. I got invited. Somebody heard me speak. And then he said, I did a white paper. They tied it together. They said, come to New York. I want to introduce you to some people. I met Simon and Schuster. I met McGraw Hill. I met a couple other of the people.
uh, I worked with, um, Howard Stern's agent, Howard Stern's agent said, you're not for me because you're not a great radio host. But I know this woman, Kirsten, I met Kirsten.
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Chapter 5: What are the current trends in capital markets for B2B SaaS companies?
She goes, you're great. I got to find something to do with you. She took me on as an agent. She took me around and McGraw Hill said, we love you. They gave me a book contract. And then my life became miserable.
Yeah. Cause you're, you're, you're, I was going to say, you're right. Did you do hire a ghostwriter? You wrote it all yourself.
No, I wrote all myself. Every word for, you know, soup to nuts. Took me a year all my time. Let me tell you how to write a book. You get a book contract, right? And then you call all your friends. You tell them about the book you're going to write and how great it's going to be. And you write like two words. You feel very proud of yourself. Call your agent.
Chapter 6: How can companies effectively raise capital in today's market?
Ask for distribution. How many people are going to buy it? And then your publisher calls you and says, can I see something? You go, I'm getting there. And they've heard that a million times. And then you realize you haven't written much and the book is due in six months. You write a chapter. It's not that good. And you start drinking. A lot.
And then your family starts to realize you're not spending time with them and you're drinking a lot and you're not working out and people start leaving you. And then you find you're alone. You can't pay your mortgage. You got to find somewhere to live. You move out to the desert into a trailer and you have a three-legged dog that comes by to eat some SpaghettiOs.
And then with nobody to bother you, nothing to do, and only a three-legged dog to talk to you, go, there's nothing else to do but drink whiskey. and write a book. That's how you write a book.
That's good. Look, I just signed a pretty large book deal with Portfolio.
Chapter 7: What are the common pitfalls in the investment process?
I went through the exact same thing, but I decided, you know what? I'm really good at talking, so I will talk my book and I will hire Simon Sinek's writer to write what I talk. And that's how we're writing the book.
Awesome. So, uh, yeah, you could do it that way as well. That's probably better. Uh, I'm with portfolio. Who is your editor?
Well, Jim Levine is my agent who works with Eric Schmidt at Google. All those, he just did Ray Dalio's principles. Uh, my editor at portfolio, her name is Leah and my writer is named Maria who, and she did all Simon's work.
Oh, great. Awesome. Congratulations. Great.
Yeah.
Okay, good.
So let me shift back for a second. So let me pick your brain first on capital markets today. So first off, debt is like all over the place today, especially for B2B SaaS companies.
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Chapter 8: What advice does Oren have for aspiring entrepreneurs?
You have folks like Lighter Capital, SaaS Capital, 1.4, 1.5X repayment caps over three to five years. If you're working with a software company today and they're looking at raising capital, where do you think the cheapest money is?
Yeah, I mean, you have to be careful just throwing around lighter capital. I mean, we're working on a deal with them right now. You know, if I just go to my email and click on this, you know, hey, feedback on lighter capital. Here we go. Lighter call from this morning. Whoa, what's going on here? Lighter capital feedback from this morning. Here we go.
Uh, threshold, no more than 40% of revenue concentrated in one client. Uh, we have 50% revenue in the moment. Top three clients will be no more than 60% of revenue. And so we'd fail that test as well. So there's lots of, uh, cap. So the capital markets, I don't think for small companies, there isn't a market.
Define small, less than what amount of revenue?
Sure. Less than 10 million of revenue. And this would be my insight for you. There isn't a market to go to. People come to us and say, hey, can you raise us capital? Can you take us to the market, to the capital markets? Capital markets are for you have 27 Jiffy Lube's. You're doing eight million in aggregate EBITDA. And then you can go to the markets and there is a deal there waiting for you.
That is a market. You're a SaaS company with. $5 million in pro forma revenue for 2018, $7, $8 million for 2019 pro forma, you know, whatever, 20, 30, 50 billion, you know, for 2021 pro forma revenue. There isn't a market for that deal. You have to make the market and then sell into it.
So if you're within the sound of my voice, that is one thing that you should think about when you go, we're going to take our deal out. We're going to go on a roadshow. We're going to go to a market. We're going to look for investors. You have to first think about how do we make a market? And then you have to think about how do we sell into that market?
I don't know what you mean. I
Sure. So when you what you have to do is you have to find 15 to 25 potentially interested investors and season them.
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