SaaS Interviews with CEOs, Startups, Founders
1597 How He Used a Search Fund To Build $7m ARR Company, Low Risk
08 Dec 2019
Chapter 1: What is the background of Will Bressman and his journey?
He goes from like TV guy, you know, nerding out on like donuts in New York and like putting stuff up on walls, you know, putting out distribution strategies to, you know, I'm gonna go do a search fund back, back a couple of years ago, found an agency with a good book of business, ended up buying it. That was RIA in a box today.
They've scaled over 1800 customers paying at least five grand per year. So call it north of 750 grand per month in revenue. In May this year, they partnered with Alkaline, a private equity firm, got a nice return for all the early search fund backers.
He's now focused on continuing to scale that with a SEMA 45 between New York City and Cleveland, 102% net revenue retention annually, 10% gross revenue churn. Again, cashflow positive, building a healthy business, willing to spend up to first year of ACV to get in these new financial advisor customers. Hello, everybody. My guest today is Will Bressman.
He's the CEO of RIA in a box and a former manager of business development at LX.TV, a digital media content provider acquired by NBCUniversal in 2008 where he brokered distribution and content partnerships. Before that, he worked as a strategy and analytics projects at Good Morning America.
He holds an MBA from the Graduate School of Business at Stanford University and is a graduate of Harvard College, magna cum laude with a degree in history. Will, are you ready to take us to the top? I am, yeah. All right. History, Stanford, NBC, and now you're doing RIA. What's RIA do? Is it related?
It's really everything I dreamed about as a kid. Yeah, right. It's not directly related to the industries that I was in previously or clearly what I studied in undergrad. But for me, the experience, and again, very happy to kind of go into this more, has really been about sort of building a company and sort of being part of a SaaS entrepreneurial environment.
And in the process, really falling in love with the industry and learning a lot about it. But my original motive for getting involved is a little bit more from the entrepreneurial perspective and from the software perspective and the industry per se.
So walk us through what the, so it's pure play SaaS. What does the company do?
Sure. So we provide compliance and operation solutions for independent financial advisors. So, you know, if you think about a big financial institution where there's tons of groups and tons of offices around, around the country or the world, uh, you know, all that stuff is typically handled in-house, but increasingly those advisors are going off and being independent.
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Chapter 2: How did Will Bressman leverage a search fund to acquire RIA in a Box?
And Will, what are these folks? I'm sure you have a bunch of different cohorts, but on average, what are these customers paying per month or per year to get access to your tool?
Sure. So we're sort of in the range of like five to fifteen thousand per year.
OK, fair enough. And I mean, would you say more towards like the five side or more enterprise at fifteen?
Um, it really spans the gamut. I mean, we work with about 1800 firms and, uh, you know, in a way that's a sort of mean and median or, or, or interesting thing, both with our client set, but also the industry in general. Um, so we do really run that gamut.
Okay. Really goes really the full spectrum there. Yeah. Um, very good. And then look, I mean, I can take 1800 customers times the lower price point you just gave me and kind of back into 750 grand a month in revenue. Is that accurate or directionally correct?
It's directionally correct.
Okay. Very good. Why do you smile when I say that? You knew I was going to do that. Sure. I'll leave that to you to do the math. Okay. Well, but I want to make, if those numbers are wrong, I want to correct them. You said 1800. Okay, good. I just want to make sure. Yeah. I think maybe you're smirking because I used 5,000 as the minimum, but you have some at 15.
So you're potentially doing significantly more than that, but I don't want to push you too hard there.
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Chapter 3: What services does RIA in a Box provide to financial advisors?
Thank you. All right. All right. Bootstrapped or raised capital?
So we did something called a search fund and And what that vehicle is for those not familiar is basically you buy an existing business with a group of initial investors, but then don't put in additional capital going on. So we're not following the traditional venture model of you know, different rounds of funding.
So it really follows more of the bootstrap path where we've grown through our own sort of internal reinvestment and the money we've generated through the business as opposed to kind of tons and tons of VC rounds along the way.
Yeah, this is spoken like a true Stanford grad. I can't tell you how many search funds from Stanford grads that come across my plate. Those of you not familiar with the model, you know, you get paid essentially, call it 120, 150 grand a year for two years. The investors go, yeah, Will, we'll support you. Go find a company. When they do, they kind of become the financial backing.
Is that, Will, generally the approach you took?
Yeah, it's hard to believe it's true, but yes.
Hey, there's nothing, by the way, there's nothing wrong with that. I think it's an interesting model. The challenge is how do you find the deal, right? It's deal flow. So walk me through that process. How'd you land on RIA?
Sure, so as I said, this was really everything I had been preparing my whole life for. Of course, yeah.
Yeah, the kind of timing for us was this was right after the financial crisis and some of those themes I was talking about before, the fragmentation of the bigger financial services, the notion of people more and more wanting to have their own sort of in the bigger economy and certainly in this industry, their own,
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Chapter 4: Why do financial advisors need compliance solutions?
I'm also giving a session that basically pulls data points from the over 2,000 interviews I've done with SaaS CEOs and showcases six of the most unique growth strategies, kind of off the obvious path growth opportunities that CEOs have used to drive their first million and 10 million in revenue. So I'd love to see you there. And we've negotiated 10 tickets at a discount, a 40% discount.
The link to use is NathanLatka.com forward slash growth. That's NathanLatka, L-A-T-K-A dot com forward slash growth, G-R-O-W-T-H. On that page, it'll automatically take 30% off for the first 10 of you and then use coupon code the top for another 10% off. Now, if you choose to make sure you're attending, be sure to email me.
If you go use the link now and grab it, I'll make sure to step on one-on-one coffee with you. I want to meet you in person and spend some time together. But again, I'll be at the Growth Marketing Conference on December 10th and 11th in the beautiful city of San Francisco at the most beautiful hotel, the Fairmont. I hope to see you there. NathanLacka.com forward slash growth.
Now, Will, I think maybe you're an employee now again. What happened in May this year?
We partnered with a private equity firm here in New York called Aquiline Capital Partners. And the idea really with joining with them was to give us that next phase of capital and really kind of expand our capabilities and our ability to serve the market. So it was sort of a transaction, so to speak, but with the idea of continuing to scale what we're doing even more than where we were today.
Did it more than make up and really give your search fund backers, I mean, a great return back from four or five years prior?
Yeah.
Yeah, I think they were excited and we were excited to be able to do that. Obviously, you know, we got the backing of those people when we just had a hope and a dream. So it was nice to be able to reward them. But I think for us, we were also realizing that to really capture what the opportunity was in this industry, joining with someone that had a little bit more industry expertise and
the ability to kind of scale it going forward was the right move for the company. So, you know, I'll use the same cliche. It had that kind of win-win feel of the original search investors felt very pumped, but I think we felt like this positions us to go forward in a very nice and exciting manner.
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Chapter 5: What is the pricing model for RIA in a Box's services?
So we sort of have two categories. There's the overall, which includes people going out of business and then what we call preventable. We're above sort of 90% in gross retention and even higher in what we call preventable retention.
That's logo retention or revenue retention?
Logo. Revenue actually over 100% because of increases.
Well, gross, gross, gross, gross revenue retention is what?
It's a little over 100%.
Wait, gross can't be over 100.
Sorry, net is over 100. Gross is in that same sort of 90-ish percent.
Okay, so 90% gross retention would mean your expansion's gotta be higher than 10% to have over 100% net revenue retention. Is that accurate? Yes, that is. Okay, and sorry, I cut you off. Net revenue retention, you said it was pushing 120?
No, just a little over 100.
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