SaaS Interviews with CEOs, Startups, Founders
1341 Reverse merger on australia stock exhange
27 Mar 2019
Chapter 1: Who is Noah Abelson Gertler and what is ShareRoot?
Hello, everyone. My guest today is Noah Abelson Gertler. He's a lover of dogs, people, uncontrollable laughter, and for some reason, water fountains. More importantly, he's the founder of ShareRoot, which we'll dive into today. Noah, are you ready to take us to the top?
Yes, sir.
All right. What do water fountains have to do with ShareRoot? How do they connect?
So they don't connect in any way. I love water fountains. It's the drinking fountains specifically because they are free and they provide the elixir of life. Water and anybody can access them. So I love it.
All right.
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Chapter 2: What unique connection does Noah make between water fountains and ShareRoot?
What about your tool? Is it the equivalent to software as water and the elixir of life is to us?
You're so spot on, it's crazy. Yeah, so we're working on a platform. Our main focus right now is a platform that's all about giving control over consumer data and privacy back in the hands of consumers, which is really important. You've got the Facebook and Cambridge Analytica scandal that kind of brought it all top of mind, and legislation throughout the world is pushing this change.
We're finally, as consumers, we're going to be able to have control over our data.
What's the tech built on?
Uh, the Python, Django, um, and then the rest, I would say, talk to our development team.
There's a lot of interesting companies right now. I, I'm placing bets in this space. I mean, I haven't financially placed bets, but intellectually my bets on this space in terms of users like you and I owning our content. I just think blockchain is going to be the easiest way to do that, right? With encrypted codes, reach this content you'd create.
Why, why are you approaching it your way with a traditional tech stack versus using something like blockchain?
Yeah, so we've heavily considered blockchain and it isn't out of the picture or not in the cards. So that's a simple way of explaining it. The reason was initially why we didn't dive into it was testing it not on the blockchain was the easiest way to test.
But it's very technical, some of which I don't understand, but there's a few ways that make it difficult in order to have that data be accessible from the consumers and not from the companies in certain ways. to have it rest on the blockchain. So in other words, again, test out the concept first. It's kind of like the MVP principle, right?
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Chapter 3: How does ShareRoot empower consumers regarding data privacy?
Sure. Walk me through a little bit of the history here. When did you launch the company?
Launched the company five years ago and a little bit over five years ago in my co-founder's backyard in Berkeley, California. We've gone through a wild set of events. We participated in 500 startups. in the first year and a half, something like that, grew the team to eight people, and we were focused on Pinterest at the time, so something wholly different.
Then we went to a full-scale pivot, and then we identified the potential of going public in an international market as a route towards fundraising that wouldn't pigeonhole us to VCs. There are benefits to VCs, and there are also a lot of reasons to not go in that direction. How much have you raised to date? We've raised about 10 million to date.
And we raised about 600,000 before going public on the Australian Stock Exchange. Okay, so some of that 10 million was from the IPO?
Yeah, yeah, about 3.5. Okay, got it. So you'd raised about 6.5 prior to that.
No, sorry. So we raised about 600,000. before getting on the path of IPO, getting on the path of going public. Once we started on the path of going public, we did a small raise through Australian-based investors. We ended up going public on the Australian Stock Exchange, which is their main board.
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Chapter 4: What technology is ShareRoot built on and why is it significant?
It's like The Nasdaq or New York Stock Exchange out there. So we did a raise initially and then we did an IPO raise, even though we did a reverse merger, which is a respect thing out there. Whereas in the US, if you do a reverse merger, it's just garbage.
Explain what that is.
Yeah, so a reverse merger is there are companies that are public entities, also known as shells. So this is a public company, a company that has gone public, that is not doing so well and has gotten to a position where it realizes, hey, our business just isn't going to work out. So then they open up and they say, look, there is value in just being a public entity.
So now let's look around in the world or in the market to figure out what promising company we can pull into our shell, into our public entity, and essentially help that company go public because we see that company as having a lot of potential. And who, which company was that? So yeah, so we merged into Drumroll, a company called Monto Minerals, which is in the tin mining space.
So naturally, you go from tin mining to social media marketing. I mean, it's a direct fit.
So I don't understand. This mining company is now part of ShareRoot.
So this mining company basically stopped all their operations, right? So once they dug a few times in Australia, they realized, look, we're not going to be able to do the tin mining thing. So they look around, they say, okay, we've got this shell. It's worth about $1.5 million Australian, which is just the public entity. Let's find a company that can come in and take over the shell.
We'll change the name into what that company is going to be. And we as directors or we as shareholders of Monto Mineral will now get shareholding in this new company that we bring in. So ShareRoot was introduced to them. Once we had started down the path of looking into going public, it's very confusing.
So you went public via a reverse merger, right? You basically said someone else already did a hard admin work. They already did the roadshow. Let's just put our brand into them essentially. And now we have all the upside of a public company.
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Chapter 5: What is a reverse merger and how did it benefit ShareRoot?
But it sounds like you're able to tell a story that the market's validating and excited about. And that's allowing you to keep the market cap at whatever to eight or nine or ten million.
Well, let me just spin this for one quick second. We only acquired this business, this agency, which is the majority of that revenue. We only acquired that April 7th of this year. We went public two and a half years ago.
At the time that we went public, we had a UGC software that was the first in that it enabled companies to get a legal licensing contract signed by a consumer saying, yes, UCLA, or yes, Costco. You can use my photo in your advertising. You can take a video and put it in a TV commercial. This is the SaaS side of the business, right? This is the SaaS side of the business.
This is what we were doing about three years ago when we started looking at going public. We went public in the early days of January of 2016, so two and a half years ago. What was our MRR at the time? MRR was at about $700 when we went public. Market cap at the time was $13 million Australian. Let's just for simplicity purposes call it $10.5 million US. That's $700 in MRR.
So markets, again, I mean, that's gonna give you a bit more context here.
Yeah, but Adam, why? Like when I hear you say that, I say whoever's putting money behind you is an idiot. Like that's all I hear. That's all I hear is like, I don't understand. Why would someone value an agency on professional services revenue at like 7X revenue? I don't understand.
So, Noah, you call me Adam, but that's okay. No worries. Both Jewish names, it works. Why would they, yeah, I mean, look, the market was going crazy at the time, right? The market was going crazy, and we had big blue chip clients, you know, McDonald's, Universal Pictures, ConAgra Foods. And we had a pitch that made a lot of sense to Aussie investors.
A lot of those investors have since left because we weren't, it didn't blow up into an enterprise platform in that way. There's a lot of other companies on the Australian Stock Exchange that were way over bloated in valuation, things that you wouldn't even believe. We're talking hundreds of millions of market cap and they're, you know, under a million dollars in quarterly revenue.
And so it's a different world out there. There's a lot that goes into it. Again, roadshows, trips, you're, constantly talked about on chat forums, that sort of thing.
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Chapter 6: What challenges did ShareRoot face during their IPO process?
So it's not I want to be cliche, but it's not.
completely about me right like at this at this stage well i'm just trying to figure out what's motivating you right because if yeah you own equity in a company but other investors are leaving on the public markets there's a valuation that who the hell knows if you're gonna be able to grow into it and actually get a good return on that and see the stock price go up right so i'm trying to figure out like what's keeping you attached because you have a high opportunity cost you seem like a young guy a lot of energy you went through 500 so you have a network you get the hell out of this go launch a new software company where you get real value like you know real multiples that you can actually grow into and go make a billion dollars
Yeah, I actually see the track that we've taken as a company is actually the right track to go rather than necessarily the 500, you know, or going back to like the VC.
I'm just saying you're capable. I'm not saying go raise VC, but you if you got into 500, you're a founder that knows what you're doing. You know how to build tech. Go build a private SaaS company, bootstrap it to millions in revenue and make yourself rich. How are you going to get rich off this? I mean, honestly, how you make money on this?
One, you're making me blush. Two, I've got a little bit of sun, so I don't know if you can tell. But look, there is high upside. That's the easiest way of explaining it, right? So if there wasn't high upside, no way would I stay in it.
But real or your ability to tell a story? I mean, you're a good-looking guy. Right now, I'm crediting $6 million of the market cap because you're a semi-good-looking guy.
I don't even know how to continue with that. I mean, this is I'm being hit on.
I'm just I'm just trying to figure out what's going through your brain. This this stuff must have cost through your brain. Like, right. I'm going to bring in this female founder. That's a great story. Maybe make her the CEO. I can get the hell out, go back and start my own thing.
Yeah. Yeah. So so I see us as being able to grow two main ways. Right. So the privacy and data. protection stuff is huge, right? And that's changing the way that marketing is being done. So if we can do that right with our platform, I'm thinking a 50 million market cap is very attainable and not under the metrics that you would need to get there under the way that you're thinking about it.
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