SaaS Interviews with CEOs, Startups, Founders
$20m Payday and he still controls ChiliPiper with his Wife Alina
04 May 2022
Chapter 1: What is the main topic discussed in this episode?
Founders, what's going on? You guys know I love in-person events and they are back. The recording you're about to hear is from our most recent event where we had hundreds of founders come together, share intimate details, templates, KPIs, OKRs about their business. And it was something special, something special.
Chapter 2: How do founders benefit from in-person events?
We'd love to meet you in person. If you want to see the next live events we have coming up via our schedule, the link will be down below in the description. If you're listening on iTunes, check this out on YouTube. You'll see the links in the description or you can just Google founder path or Latka next event. We'd love to see you in person. In the meantime, though, enjoy this recording.
It's a good one. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Please help me welcome to the stage, Nicholas from Chili Pie.
Welcome. How was that? That was good, right?
Awesome. Actually, I'm the only one not with the presentation. I volunteered to be interviewed by Nathan. That's good. He's the best interviewer I've ever come across. Whenever you ask, he digs deeper and finds information. So I figured that would be the best way to do it.
Let's not bury the weed. We're going to do your life story. But first, you just did a secondary. How much secondary did you do? And then we'll go back to life story.
Okay, all right. We did a secondary with Tiger Global. We sold 33 million. So we raised 33 million and we also sold 33 million. That's why I have new pants because I was able to afford them.
Those were expensive pants. Yeah, trust me. So just to be clear, the total round was $40 million and $7 million was second?
So the total was $66 million, $33 million in, $33 million out. I see. Got it.
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Chapter 3: What was the significance of the secondary raise with Tiger Global?
Then I have a little secret, because I know Nathan likes secrets. So I sold my biometrics company in 2005 for a few million. So it was comfortable, but not full retirement money, at least the kind of retirement I'm considering. Thanks for being honest about that. That's great. So I played around. And actually, in 2007, I started a company to do exactly what G2 does. And I failed. I failed.
And my interest was picked when Goddard said, you know, at the beginning, we had no reviews. Nobody come. Because exactly what happened to me, except that I pushed two years into it. And after two years, 2009 crisis happened. Actually, my daughter got hit by a car. She was three years old. So I had to give up. And I never made it work.
And I'm thinking, I don't get it because it's such a good idea. And so now I see G2 working on Billions. It's amazing. Anyway, it's an interesting story that sometimes you try and timing doesn't work or the angle doesn't work. I had this purist idea that I shouldn't pay for reviews. You heard him say he gives $5 cards to people to write reviews. I thought, that's not right. People should just
I'm a bit of an idealist.
Raise your hand if you've ever paid for a review, be honest.
Yeah, yeah, yeah.
It's part of the game.
Anyway, so then I did a whole bunch of other things and I got remarried. My wife Alina is Romanian. And ironically, she's a tech person. She went to Polytechnica Romania and she was doing really well as a product development person. She did the first iPad app that Steve Jobs demoed when he launched the iPad. She was working for Reuters at the time. Then she was hired at Bloomberg.
Then she was VP product at Pearson. And I kept telling her, when you have this kind of talent, you don't work for people. You make money to yourself. And I kept trying to convince her. And finally, in late 2015, she agreed and we started a company, and that's Chili Piper.
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Chapter 4: What challenges did the guest face before founding Chili Piper?
I'd say it's the best interviewer. You're still married, so she has 51%, I guess.
No, she has slightly less than me. I thought it was fair that... So I'm going to tell the full story of the company, because it didn't quite happen that way, since we have time. I tried to convince her in 2013 to do a company and she didn't want to. So I did it on my own and I started a company to go after a problem that I had.
I was helping a friend running a sales team and my reps refused to update Salesforce. And I said, look, you're not going to get your commission if you don't update Salesforce. I said, look, we have other things to do.
How many people have said that? You're not getting your commission if you don't update the damn Salesforce field.
Yeah, right, exactly, exactly. So I thought, you know, I'm going to do a smart system that goes into the sales reps' email contact calendar, find the information, put it in Salesforce, and everybody's happy, right? They don't have to do anything, and my system does it. So I start that company. I start building the system.
Then I find that there's a company in Israel called Implicit that's doing the same thing. And I'm thinking, well, that happens, right? Good ideas happen at the same time. And we're doing well. We have a freemium product. We're still growing.
And then I found that a company in San Francisco started before me and thought that it's such a good idea to do this smart capture of data that they're going to go and disrupt Salesforce. And I thought, what a stupid idea. That's what my thinking is. That's not what Kleiner Perkins thought, because they gave them 10 million, and shortly after, Accel gave them 40 million.
That company is called RelateIQ, that most of you have heard of. Then some VP at Salesforce decide to buy Implicit, my competitor, and I'm thinking, fuck. They bought my competitor. How am I going to do? And as I'm kind of... Recovering from that information, I hear that Mark Benioff bought Relata-IQ for $400 million and incorporated Relata-IQ in the company.
So at the time I had raised Ian Joel money, 1.7 million to do that company. And all my angels call me and say, you're fucked. We put it in French. They've put 430 million to acquire your capabilities. You think you're going to win? And so that's when I called Alina to the rescue. That's what really happened. I said, Alina, come help me. I'm fucked. All right, so now we're going to talk about...
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Chapter 5: How did Alina contribute to the success of Chili Piper?
If you guys are building a SaaS application that relies on your customers integrating with HubSpot or Google Drive or Stripe or Salesforce or MailChimp, Having your engineering team spend the time to study all those API docs, manually build the integrations, and then maintain those integrations over time is a massive engineering time suck.
This tool allows you to ship those integrations with a push of a button to your customers. You save engineering time. You avoid all those messy docs. It's just a much simpler process. Now, many of you guys solve this by just sending people to Zapier, but that takes people out of your experience, which you don't want to do. Try Paragon today at nathanlatka.com forward slash Paragon.
That's nathanlatka.com forward slash P-A-R-A-G-O-N.
So that's 2016. And then we start getting some good business. And then we start looking, okay, now how do we build a real company? Because now we're cash positive. We can hire more people, but we don't have a real business. When you talk to VCs, it's like, ridiculous product that you do is a hobby.
So we're looking for other opportunities to do something and we found these people called inbound SDRs. So I said, what is your job as an inbound SDR? I said, you've seen on the website when people come to request a demo, they submit a form, they get a thank you page, they say thank you, somebody's going to call you. Well, it's my job and I call them to book the meeting. And I said, that's great.
How is that going for you? And they say, it's going great. I'm converting at 40%. And I thought, you mean to say that 100 people asked for a demo and 60 of them didn't get it? And the reason why they thought it was great is because the outbound guys convert at 1%, right? They go for people. But of course, people never ask for a demo. It was nuts.
But the CRO of Zoom Info tell me, I'm not touching it. I'm converting at 40%. So that seems crazy. So now we thought we're going to fix that problem. So we built a solution, a JavaScript that you put in your page. When people submit a form, it automatically qualifies them. We do real-time data augmentation, data from the form, data from CRM.
We qualify, we route, we retrieve the reps, and we book the meeting real-time. And...
So just to fast, that's the core product. That's the core product. Because the key thing I want to get into is how you went from single product, great mousetrap, to multi-product strategy. That's right, exactly. So revenue was kind, I mean, not flat, but right, you were sort of stuck between a million and three million up to 2019. Something happened in 2019.
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Chapter 6: What strategies did they implement to grow their customer base?
Going from this little product we did. When we did this concierge product, we realized that... So we doubled inbound conversion. We realized that the other friction point in the inbound process. So we've extended now. We call it our inbound conversion platform. We've added a chat that we're about to launch that will help The bot chat book meeting is much faster than anything that's out there.
We're helping lead distribution to go faster for those who are not ready to book. So we're expanding on this value proposition of inbound conversion, and we're building a platform. When I started the company, I was very aware that it was not sustainable. There's a smart VC in Boston. David Scott. Yes, that's right, David Scott, who said you have to be aware of the gravity well.
It's a super interesting concept. The gravity well is that you build the software and then there's somebody next to you that can include your features in their offering. And so, boom. the features fall into that product, the gravity well. And you don't want to be in that position where somebody comes and just swallows you.
It happened to a company called Serious Insights, the disintegration with Salesforce, and Salesforce said, we're going to do it ourselves, and boom, they disappeared. So at any time we were looking for something, they would say, we are the gravity well. And right now, with the Seamount Conversion Platform, we...
There's no, Salesforce could do it, but they would have to offer something competing with us for people to choose a Salesforce solution. Just like when Salesforce bought Pardot, it didn't kill Marketo and HubSpot because it's a different gravity well. So now I think we're in a good position to be our own gravity well.
So shits and giggles aside, we love taking advantage of a VC that is just like hype market, want to get into good deals, makes complete sense. If we quantify, so to date, you and Elena, totally sort of all secondaries added up together, range, how much have you guys sort of taken out of the company?
20.
Okay, together? Yeah. Okay, so 20 out. So I don't know a better way to ask this. When you raise that valuation, your optionality is like very, I mean, you have to grow so much to get a rational buyer to pay where there's actually a successful exit. Do you really care? You've already taken 20 million bucks out of the business. You've already won.
Yeah, we care because as Mikita was saying, when we started the company, we wanted to make money, but not only to make money. We wanted to, first, it's a journey. We want to take the company public. We have this beautiful journey where we have 220 people from different nationalities getting together, working together.
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