SaaS Interviews with CEOs, Startups, Founders
How he closed $3.3m Seed (sold 25%) for Agile Management Tool Last Week
03 Oct 2022
Chapter 1: What is the main topic discussed in this episode?
So you're about to break call like $1,000 a month, right? Yeah, that ballpark. 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 these podcast interviews. Check it out right now at getlatka.com.
Chapter 2: What is the main topic discussed in this episode?
Hey folks, my guest today is Phil Reynolds. He's currently the CEO and co-founder of DevStride. Previously, he led BrightCore to Series B led by Warburg Pincus at 180 million post. And then he's recently closed 3.3 million pre-seed to build and grow DevStride, which is strategic portfolio management for agile teams. Phil, you ready to take us to the top? Absolutely. Thanks, Nathan. All right.
So no bootstrapping for you, huh? It's VC or bust.
Yeah.
Well, I bootstrapped my last company for quite a while. And when I learned that process, BrightCore. And so BrightCore was bootstrapped for quite a few years. And we really enjoyed that. We enjoyed growing the company and more lifestyle.
But what I learned at the end of it, by the time I went and raised money was, boy, I could have got a lot done a lot faster had I just gone out and raised money to begin with.
And what are some things you could have done faster, you think? And give us some context. How many years did you bootstrap, and what did you grow revenue to before you raised outside capital?
Yeah. So the last company, we started out doing quoting systems for insurance agents, and we ran that totally bootstrapped for about five years. Didn't raise capital from anyone. Got approached by a group of our customers to build a core admin system, and then we did a seed round, which helped and got us to market. It went in there seven years before we raised to Series A.
And then did a series A and 18 months later did a series B and 18 months later I exited the company. So we kind of did the standard founder VC led growth path in the last three years of the company's history. But I did it for 16 years in aggregate.
That's amazing. And how patient were you? I mean, what did you grow revenue to before your first dollar of external capital?
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Chapter 3: How did the guest transition from bootstrapping to raising capital?
Series C for a lower amount, 20 million. That has signs of a down round all over it, which is not a negative thing. That's your job as a founder is not run out of cash. So just a curiosity, I mean, was it a down round?
Yeah. So when Brightcore raised that money, it was one of those, hey, we see winter coming and we know that it's going to be a while. So let's go ahead and capitalize now and make everything stabilize the company so we can weather this storm. And all the indicators I'm sure everyone else has talked about on your show. We were seeing those same things. Yeah.
And that was the one that was at the 180 post, right? That was actually the series C round, which is different. The 180 post was a series B round. And that was only 18 months after a 60 million valuation or series A. So we tripled our valuation in an 18 month window there.
Got it. So the 13.5 was the A, the 47.5 was the B. Was the B. Yep. I see. So 47 into 180. Okay.
Chapter 4: What challenges did the guest face while bootstrapping?
So you sold about 27, 28% of the business in the B. Yep. Yeah. Okay. Okay. Fair enough. And then did you stay with the company through exit or you left between B and C?
Yeah. So I left between B and C. I wasn't at the helm right at the tail end there. So C closed a couple of months after I exited the company.
Yeah. And now, is this your brother you're building this with? You have the same last name.
It was my cousin. It was my cousin Chris Reynolds. Yeah.
So he stuck around?
No, he didn't actually. He exited the company a year before me. So he exited right after the Series B. He was like, Series B and the nature of this has changed enough. And I think I want to do something else. And I stuck in there for another 18 months, being founder guy, running the company with the private equity firm. But it was definitely a different world.
Yeah. Yeah. Completely different. Okay. So you take all those learnings, you then launch Devstride. Why? You could do anything in the world, right? I mean, you're a founder that had, you know, you built something. It doesn't even matter really if it was a successful exit or not. You built it, you raised, you had got customers, you have 20 million revenue, you can do whatever you want.
Why was Devstride the right way to use your time?
So I had this really nasty problem at Brightcore that I was never able to solve with existing project management tools. And it goes a little something like this. If you're a meaningfully sized enterprise software team, you probably have multiple products. And those multiple products have their own sort of like roadmaps that are going like this over time.
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Chapter 5: How did the guest achieve significant revenue growth after raising funds?
And what that really means is what makes it different from, I know you've had Zeb on before with ClickUp and ClickUp's an amazing product. Monday's an amazing product. They're all amazing. They're all solving a different problem than we are. They're solving sort of like project-based work where I come in and I click things off a task list.
What we're really trying to solve is I have these complex overlays on these roadmaps, and I have to assign work to teams. I have one team, but the one team is accepting work for many different work streams, and I have to report out on all those different work streams independently to different stakeholders. So that's what we're doing.
We're building a project management tool that solves that particular problem for teams who are trying to make multiple stakeholders happy in multiple different work streams.
Who are the stakeholders that most of your DevStripe customers today are reporting out to? Is it the board? Is it a senior engineer? Who's that stakeholder?
Yep. Typically, it's going to be three. It's going to be the executive at the company who says, hey, what are we doing here? It's going to be the board who says, what is my ROI on the investment that I gave you? And it's going to be some number of enterprise customers who say, hey, when's my project going to be live? When am I going to be able to implement this system? That makes a lot of sense.
Okay, very interesting. And then give me sort of a range here. What's the average customer paying you per month to use this technology?
So really, really small right now. So we just announced a pre-seed round last week. And so we turned on our subscription system to begin accepting our first dollar from our first customer two days ago.
Oh, I love it. This is a perfect moment. This is such a moment.
Brand new. So how much did you raise? Okay, so we raised 3.3 million on our pre-seed round.
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Chapter 6: What unique problem does DevStride aim to solve for agile teams?
Will he also give you like two fractional SDRs to take 30 calls a month or does he do all that?
Yeah. Yeah. We have a BDR function going there. We have a direct outreach function. Next week, I'm going to a fairly high profile sales event. He's coming with me there just so he can kind of learn how I pitch the product and all of that. It's great. This makes tons of sense. Okay. Are there any there for what about development? Um, development, we keep totally in house.
I do not fully trust development to go out the door at this early stage. And I'm really fortunate that in my last company, it was a very engineering heavy firm and we had very strict hiring standards and we also hired internationally. And so I have several hundred engineers that were on my payroll before and 150 of them have reached out and said, Hey, as soon as you can hire me, please do.
That's amazing. So yeah, I've got a, I've got a deep bench of engineers. I don't need to
engineering outsourcing for 10 years that's amazing i love this okay cool hey before we wrap up with the famous five so what's your time you know you just launched pricing you've got two those two customers what they're paying 30 40 bucks a month or what are they at uh no they're they're a few hundred a month a few hundred months cool so you know it's okay so you're about to break call like a thousand dollars a month right yeah that ballpark yeah what do you think you get to by the end of the year there's you know three four months left
I would like to see us be at probably 5,000 a month at the end of the year.
Ideally. Yep. Yep. Okay. Well, we'll see what happens there. In the meantime, let's wrap up with the famous five. Number one, favorite book, favorite book, thinking fast and slow. Number two, is there a CEO you're following or studying?
Ooh, I actually really, really like Zeb. I think he's interesting to me. He's different than me, and I like that he's different.
Yeah, he's very cool. Number three, what's your favorite online tool for building Dev Stride?
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Chapter 7: Who are the primary stakeholders for DevStride's customers?
That's amazing. Number four, how many hours of sleep date every night? Three to five.
um how do you do that's not healthy or you're just a superman how do you do that um it's starbucks fair fair okay fair and what's your situation well we know you're married but do you have kids yeah i have a 15 year old and a three-year-old who i love dearly and love spending all my time with you're very busy okay and how old are you i'm 42 42 last question something you wish you knew when you were 20
it matters more who you know than what you know.
I love that. All right, guys, there you have it. Devstride.com, his first company, Bright Quarry Bootstrap for seven years, grew to about a million in revenue and said, you know what? It's time to put the pedal to the metal. He went out and raised a bunch of capital, grew it to 5 million in revenue, then 20 million in revenue, then left. the company then recently sold.
He used a bunch of that money, 500K, him and his wife, to put into the new company, devstride.com, which helps you manage agile practices to report out to key stakeholders like your board, management, or customers that care about the next product release. He just launched his paywall, which we love.
He's got folks right now, he's got about, what, seven full-time, another 15-ish contractors, 3.3 pre-seed round raised at a 12.3 post, sold about 25% of the company, but really focused on now scaling up to five grand a month by the end of the year. We'll see what happens. All right. Thank you so much, Phil, for taking us to the top. Thanks a ton, Nathan.
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