SaaS Interviews with CEOs, Startups, Founders
Pet Land Riches! 60% Profit Margins on $100m SaaS Fintech Play
08 Mar 2021
Chapter 1: What is the main topic discussed in this episode?
It's had a lot of benefits that we weren't really planning on. It's been a great marriage between the companies. The combined entity will do what in monthly recurring revenue? Last month, we did $138,000. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com.
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Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Behan before Google acquired his company for $2.6 billion. We want to see a real pervasive data culture, and then the rest flows behind that. If you'd like to subscribe, go to getlatka.com.
There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. 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. Hello, everyone. My guest today is Brad Parker.
He's a 20-year veteran in the pet retail space and a serial entrepreneur. He owns four retail pet locations, a marketing company called Social Network MD, a finance company called Financing Your Way, and a SaaS business called FormPiper. He thrives on identifying the problem and solving it and helping retailers drive success in their business. Brad, you ready to take us to the top? I am. Let's go.
All right. So what is FormPiper and is it a pure play SaaS business? Yeah, Formpiper is a software designed to help retailers automate their consumer finance process. And give me maybe an example retailer that uses you. Take a furniture store. You go in to make a purchase. You want to use their same as cash offerings. They might use four or five different finance options.
So we really streamline the process for the customer to make it easy for them to get that approval. And are they always brick and mortar locations or do this online digital brand as well? Right now we focus on brick and mortar retail. Brick and mortar retail. Okay. And, and give me a sense of how you're helping these guys.
If I go into a brick and mortar spot, I buy a mattress and then they're using you on the back end to help me finance the mattress purchase. How's that all work? We really streamline the process and make it quick for the consumer. So the consumer only has to fill out one application.
If you're not using FormPiper or some form of portal system, you might have to fill out multiple applications to get that approval or the sales associate might have to fill out multiple forms. So the time can really add up. When you're sitting there waiting for an approval, you don't want to wait for 30 minutes.
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Chapter 2: What is FormPiper and how does it help retailers?
I mean, imagine they're not financing like a dog bowl, right? No, it would be a pet and then the supplies that go with it. So it could be a puppy, kitten, bird. It could be fish, fish tanks, even small animals. The whole goal in the pet land model is to identify the right pet for the customer and then meet the needs of both.
So typically a consumer is going to purchase a lot of supplies to go with that pet. So sometimes breaking it up over 12 months or 24 months can make that process a lot easier. Got it. So these were $1,000, $2,000, $3,000 purchases. You got it. Yep. I see. Very interesting. Okay. So scale with the franchise model, you're now doing $18,000 a month in revenue. Have you bootstrapped? Yes.
All bootstrapped. Love that, man. Yes. How many VCs have you turned out? We haven't had any reach out. We've kind of been over in our little corner of the world just building it. So we'll see what happens. But we've bootstrapped all of our companies and like being in control. And so we just continue to continue to scale. We recently acquired the finance company and FormPiper merged together.
So it's going to take our monthly revenues up to six figures. So we're going to be able to continue to pour money into marketing and our team and grow it on our own path. Tell me what that means. What does it mean to acquire the financing company? What is the financing company's revenue? That revenue right now is about $100,000 to $120,000 a month, just depending on the month.
What we do is we help retailers identify the right financing companies to use for their customers, and then we're going to receive basis points on the back end there. How many, usually on average, basis points? That can be anywhere from one to two.
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Chapter 3: How does FormPiper streamline the financing process for consumers?
I'm sorry, 100 to 200. One to 2%. Yeah, yeah. So what FormPiper does is it actually makes it easier for the business to use multiple forms of financing. So what we see is the financing revenue also increases. So we've seen huge spikes. So we just decided that now that the software is proven and tested, we're going to move that into all of our retailers through financing your way.
And so it only made sense for it just to be one company so we could really scale. The name of the company is Financing Your Way. How much GMV, how many loans, how much went through their platform last year total? About $100 million. $100 million. Wow, interesting. You just bought this company. How do you value a business like this where they're doing $100 million in GMV?
They're making about, it sounds like about $1.5 million based off their 1% to 2% fees. You came in and buy it. What do you buy it for and how do you value it? Well, I own the company, so it's not really technically a buy. We just kind of merged them together. Oh, I see. You own 100% of that business. That's correct. Me and my business partner, yeah. Got it. Well, hell, that's an impressive story.
When did you launch that company? Seven years ago. Oh, interesting. So those are really your roots. Now, did you launch this at the same time you opened your retail store with Petland so that you could do better financing? So the retail, I've been doing that for 20 years.
So basically 20 years in the pet space, seven years in the finance space, realizing that financing was important to the business model. And then now 18 months in the software business to help catapult and make the systems and processes easier.
Formpiper is designed to shrink the time that it takes to run applications, but what it actually does for the retail business is it allows your key employees to be out on the floor helping customers as opposed to running applications and doing data entry. It's had a lot of benefits that we weren't really planning on. It's been a great marriage between the companies.
The combined entity will do what in monthly recurring revenue?
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Chapter 4: When was FormPiper launched and what challenges did it face?
Last month, we did $138,000. Between the two. This is interesting. And over the next year, which do you anticipate will grow faster, the pure software player or the financing percent GMV model? It's going to be interesting to find out, you know, cause we, you know, we just got the software to where we can scale it. I think from a percentage of growth, the software will grow faster.
But we're very, very excited about the, the financing your way revenue trailing it. And is, are they both profitable? The finance company is extremely profitable. Formpiper is not currently just due to development. We're putting into our third iteration that will launch at the end of March.
And the great news is once that's done, we're going to be able to move to more of just a maintenance mode for both of our development teams. How many folks are on the team total? So we have me and my business partner, Ryan. So two founders, two salespeople. And then we started with our social network MD team. We had our developer on staff.
So we were able to build that MVP product very, very economically. And since then, that developer has gone out, started his own company. And so now we have four outsourced developers on that team that we're able to use so we can scale the product faster. So eight total, four full-time, four part-time. Those four part-time are engineers you've outsourced. That's correct.
Where do you outsource to, out of curiosity? Maker Software is the name of their company. Oh, it's like an agency. I'd say, you know, he was our employee and he had friends that were developers and he was looking at an opportunity outside of ours as well. So he said, you know, I'm going to start my own company. He wanted to know if we'd become a client.
We saw the benefits of having him and the additional team members. And so we were proud to be his first client and hope his company grows and succeeds from there. Yep. You seem like a pretty sharp business guy. I'm curious. You're not looking to sell the company, correct? No. No, not right now. No. Yeah. So cool.
So removing that from the equation, when you put your rational sort of hat on, what would you sort of rationally value this business at today? Well, when looking at the P and L, you know, it drops about 50 to 60% profit, you know, to the bottom line. So it definitely provides a very nice lifestyle for the team. Just looking at what other people do, you know, a six times multiplier.
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Chapter 5: How many customers does FormPiper currently serve?
So yeah, Would it be $4.8 million on EBITDA? Yeah. Yep. Yep. Super interesting. What do you choose to do? I mean, a lot of founders, you know, you're unique and I like this aspect of what you're doing. You know, a lot of founders think they have to burn capital, never make money. You're making money.
It's like a real business, which we love, but how do you choose how to sort of make capital allocation decisions? So if you and your partner are splitting 50, $60,000 in free cashflow per month from profits, what do you choose to do with it? Don't you say, well, wait, I probably just put this back in the business because the business is my best ATM right now. Yeah, we battle with that.
You know, we like to have the money coming out for lifestyle reasons, but we're definitely at the point where we're investing a lot of money back into the business now. You know, when we were just running the finance company, our margins, our return on investment for marketing was not there because it really took a lot of time to build that customer up to actually see the return.
with the software you know when you close the deal you close the check right so you're increasing that revenue so now we've got models for scaling marketing we're working with some great companies we're launching with web profits next month uh so yeah we're ready to just really throw some fuel on the fire now that we have the software product to help us speaking of that fuel i mean what's your fully weighted cac to get into 200 a month customer um i'll be honest i haven't
I haven't put those numbers together yet. You just know you're making money and whatever else happens, happens. Right. Exactly. We're going to allocate a certain percentage to marketing and we're just going to start running, see where we're winning, see where we're losing. And then we'll just, you know, shift when we need to. Out on that note, let's wrap up with the famous five.
Number one, favorite business book. I find the, my favorite book is usually the last one I read because I can apply, you know, to it. So the happiness advantage. Number two, is there a CEO you're following or studying? Right now, because I'm in the SaaS and trying to learn it, it's new for me. So I'm really following a lot of Dan Martell's content. Really appreciate his content. He's great.
We love Dan Martell. Number three, what's your favorite online tool for building a business? For me, it's the Google Suite. For my team, it's HubSpot. Number four, how many hours of sleep do you get every night? Eight, every night. Eight, love that. And number four, sorry, what's your situation? Married, single kids? Married, no kids. No kids, okay. And how old are you? 41. 41. Last question.
What's something you wish you knew when you were 20? Get into the SaaS business. Guys, there you have it. Formpiper.com, helping retail locations like Petland locations finance customers when they come in and purchase for $3,000.
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Chapter 6: What is the pricing model for FormPiper's licensing?
They have a software business. They sell to Petland directly so that the retailer pays a fee to use the product. And they also have a financing product, which profits over $100 million in loans or GMV. Last year, they take 1% to 2% cut of that. It's doing $120,000, $130,000 a month in revenue.
uh, with really healthy margins, the combined entity doing 50 to 60% profit margins, totally bootstrapped. And they look to continue to scale with some paid spend this year, Brad, thanks for taking us to the top. All right. We appreciate it. It's nice joining you.