SaaS Interviews with CEOs, Startups, Founders
Estated Grows 100%, Breaks $1.7m ARR for Property Data Platform
31 Aug 2021
Chapter 1: What is the current annual recurring revenue for Estated?
We ended the year at 900K in ARR. And so the last thing I see in profitable is March. Yeah, we started January at 77. So to be at 140, we'll definitely cross over like a 200% growth this year.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Folks, exciting interview today. My guest is Josh Frazier. He's building a company called eStated.com. It's a property intelligence tool. Josh, you ready to take us to the top? Let's go. All right.
There's a lot of money out there right now and everyone's willing to buy houses, investors included. Who is using you guys? Is it investors or homebuyers, consumers directly?
Actually, our bigger segments are in fintech and insurtech. So we're working with like Blend and SoFi and State Farm and Swiss Re and USAA and companies along those lines on more like the PNC insurance side. and getting lending and mortgages and just trying to speed up all those tools. Because like talking to a friend in Florida yesterday, it took them 16 hours to get a mortgage.
It's like, we should be able to do this in 60 seconds. And so we're helping with a lot of the data on the background to build like profiles around those houses for mostly insurance and yeah, lending. And so how many customers like that do you have?
We have 151 customers as of today. Amazing. Okay, got it. So this makes sense. And the main model is licensed. It's basically a licensing model. Is it SaaS fee or it's like per API call or something?
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Chapter 2: How does Estated support fintech and insurtech companies?
Okay, got it. So I mean, that's a super healthy... I mean, can you spend more money there? That feels like healthy ad spend to me.
Yes, but I only have one salesperson. We're recruiting. We'll be hiring another one here right away. And then we'll keep ramping that up. But we had two salespeople turn over last month. So a little bit of a change.
You know, this is always a tricky, this is one of the hard, you know, like when it's engineering, I see more SaaS founders that getting like the sales motion with actual people involved, like the reps hired on board and sticky is really difficult. So 100% sounds like you're comfortable being vulnerable. Why do those two people quit that recently left? And how are you thinking about the next one?
What learnings are you taking the next one?
Yeah, this was a really good learning experience. So one quit because he was an entrepreneur on the side and his business got too busy and I kind of motivated him to continue working on that. So almost my fault, but I'm proud of them. And then the second one was once, so I had this very experienced sales rep, Liam was in the middle and then we had a junior sales rep.
And so when the middle rep quit, the disparity between my senior sales rep and the junior sales rep was so vast that I fired this junior sales rep the next day. I was like, oh, I'm like, you're not going to be able to cut it. And so now I'm only going to hire someone from a competitor that has five to 10 years experience.
And the words I've been using in the interviews have been, I need you to come in and hit the ground running. I think as a SaaS founder with, we have 12 employees and I don't have a lot of time for training. And so I want people to come in and know the language, know how to sell already. And so I call it, I need them to hit the ground running.
And so I'm really only looking at people directly from my competitors and we're using a recruiter to help us with that.
Interesting. What do you pay a recruiter to do this sort of thing?
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Chapter 3: What are the revenue models used by Estated?
That's incredible. This is like a perfect fit for you guys. Interesting.
It's blown me away so far, the people that they've sent to it. A little bit more expensive than I would hope. I think I'm just Canadian in British Columbia getting used to what someone gets paid in New York. It's always a little surprising to me.
Yeah. So what do you think, like this new hire, what do you think their base will be and what will their quota target be and what will their total on-target earnings be?
Yeah. So we are, I have no cap. Their quotas are 1.2 million a year and we pay 10%. So if they achieve that 1.2 million on a $50,000 to $60,000 base, they could make up to 180,000. Got it. $150 to $180 depending because we pay out on the schedule of how they sign up. So if it's like month-to-month subscriptions versus annual subscriptions, there's a bunch of variability in that.
But like $150 is like OTE, hopefully. That makes a lot of sense. How do you manage like a developer who might hear this interview and hear that your new sales rep is going to make more than them and they're going, but I'm the one building the technology. Why don't I get paid more? That's a great question.
We have... I've never been asked that, first of all. And we do have a lot of transparency within our company. People do know how much everyone else is making. I'm not even sure the developers all understand what the OTE number is. They probably just see the base. I'm not sure that that acronym makes a lot of sense. So...
But I do think that they understand that the salespeople are the ones, they hustle at a different pace and have a different type of work environment. Whereas the engineers are all, it's pretty cushy. They get tasks, they get them done. I know they work hard, but it's a little bit just of a different environment to work in. Their environment's a lot more comfortable. Our salespeople are grinding.
How many engineers do you have? Seven right now. Are they all in-house or did you leverage sort of outsourced dev team?
There are full-time employees, but we went work from home, COVID, and then we have decided to go fully remote. So now we have one in Russia, one in Germany, one in Brazil, and then four in British Columbia.
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Chapter 4: How has Estated's customer base grown over time?
So it's actually been, so far it's been working out. Yeah, that's great. How do you spell VanHack? V-A-N-H-A-C-K. I don't know if it's like .io or something. I'm not sure which one it is.
We'll put it in the notes on GitLab when we publish this bad boy. So what does this put your total team at today? 12 people, you said? Exactly. 12. Okay, so very engineering heavy. Got it. Yeah, two finance people, sales. Yeah.
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The state had started right after we entered Techstars in April of 2017. Okay, 2017. And so we had no... It was bootstrapped and then Foundry came in because you kind of know we have an existing consumer business that's really, you know, cashflow positive and does well. What is that called? Sorry. us realty records that sits in the background. It's a B2C subscription.
And so, um, we launched a stated and we ran it for about eight months and then foundry group and tech stars came in and gave us 3 million USD. We were then started burning cash, 2018, 2019, 2020, um, about three months ago, a stated turn to profit again. And now we have both business units profitable.
And I don't think we'll probably go into the negative again anytime soon with no intention, at least within the next, I'd say, Three to four quarters of raising more capital. No intention of it. Such a different way to run your business.
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Chapter 5: What factors contributed to Estated's growth in revenue?
No, it was an idea, honestly. But we did have this... existing business in the background that was doing about three and a half million a year. And I guess 3 million us at the time. So I think we just got like a five X on that, but they were buying into both businesses, but I was pitching that a stated was going to be the big one. And we have a very clear path to get to 10 million ARR.
I think we could get to two and a half, three this year if we keep this up. So, um, that'll be like 300% growth, which, um, we'll be in a healthy position.
There's a lot of founders that go into this where they have like multiple projects running and like one starts to take off and you end up raising for it. And many times these VCs, like in the term sheets, it'll say you have to commit all, you know, the founder, especially you have to commit all your other IP and they'll want all these other things sort of included on the same cap table.
Now it sounds like that's exactly what you did with this business that was doing 3.5 million a year. Do you regret that today? Would you have tried to keep them separate if you did it again?
Yes, for sure. Honestly, like, you know, when, if we were to go raise a series A, there's a pretty good chance that I would take it off the table instead of taking like cashing out a little bit of my founder stock or something at that raise. I would probably just be like, I'll just take that business out because one, it's a little bit of a headache for us to do the reporting on to them.
And ultimately they know it's not the end goal for us. And so we've pitched a stated so hard. So I absolutely would recommend if you can still raise at the same value though, because your VCs are smart and they're like, oh, you have this cashflow business in the back. Like, of course we want a piece of that.
And so, yeah, you're going to work with VCs because of their network and their intelligence. So it would have been a harder pitch, but I absolutely would have tried it.
Yeah, yeah, yeah. No, interesting. Okay. And so what does the cap table look like today? How much do you still own?
What's 68%. And then, um, I'd say about, yeah, 10% is to my employees and 20% we did this a standard 20% round.
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