Jonathan Fishbeck explains why bootstrapping gave EstateSpace room to reset, solve a shared customer problem, and stay independent. He also discusses capital-gains considerations and the value of learning from a founder community.
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“million in service revenue and at that time we realized that that's just not where we wanted to be so we had like a client we had a a shareholder and we also had an affiliate partner that uh that was that was really investing in us so we were able to actually convert all of that to equity to benefit the company save on taxes and really start to partner with our with our biggest client which was a 100 million dollar construction management firm out of New York um and so so now uh 2022 we're finally scaling they were able to help us kind”
“takes integration you know to start a conversation to solve a problem for what we were trying to solve for started at like sixty thousand dollars to talk to somebody another sixty thousand dollars to figure it out and maybe I needed an I.T team to run it and so our in our space we realized that SAS was going to be the thing that we could really have a huge advantage in right we didn't so custom became a swear word in our company right you could only be configurable we wanted to be easy for people to use I mean we wanted to have”
“this is the harder part this part sucked right I had 29 people I had to fire everyone down to six two of them in the back of the room with us still right now to this day um but that was a tough part thank God we were bootstrapped um because my father and I we were able to find a loophole in the IRS which I'm going to show you some artifacts on how we did that and I think that and then we had a pandemic we were able to the pandemic is part of our Survival Story which I'm also going to show you in a second but I think what's really cool here is that you know sometimes I think that as a”
“they they SBA looked at that was that okay they counted us for the 2018-2019 time when we had a lot of employees so we were able to get a ton of free money a little bit of debt I put in another 500 our shareholders put in another 275 and now we're to the to the point where we've got about an 880k shortfall between now and the next 12 months and we're going to bridge that through shareholder Milestones so um and as you can see here our burn rate it's it's going to be close to about 4 million dollars and we're going to see”
“simplify something that's super complex right we came from a world where it was super manual a lot of time a lot of effort and and and a lot of times he would follow you'd fall short so um really being able to to kind of to come through all of that you know we talk about and I think in my takeaway you know we talk about pivoting and I think that the most important thing is that you're never going to be scared to Pivot um you don't always have to Pivot right it may be like right now we're not”
please welcome Jonathan fishbeck to the stage from estate space to tell us how bootstrapping saved them all right thank you everybody I'd like to just start off by thanking Nathan another team at founder path everything has just been top-notch here how I got here I did a podcast with Nathan back in the summer of 2021 at that point in time we had just kind of overcome a major failure in SAS and it was a really great opportunity for us we're going to talk a little bit about that today but super
excited to be connected with other SAS Founders I found you guys to be kind of the best Educators in the space along with my advisory team so we're going to talk about how bootstrapping saved us and how we came out of service and were able to Pivot to SAS successfully today so I want to talk to you guys about our what our how and our why I want to talk to you about what caused us to almost fail uh how we were able to um make our move to SAS and then why SAS is the best
thing on earth so when you start to look at at our Revenue growth um not not really super impressive compared to some of the other things that you've seen here but there's a pretty cool story behind this so again focusing on 2021 a podcast with Nathan we were we were still doing service right had a had a service mindset we came from service construction industry super successful I didn't just didn't translate we were doing about 2.1
million in service revenue and at that time we realized that that's just not where we wanted to be so we had like a client we had a a shareholder and we also had an affiliate partner that uh that was that was really investing in us so we were able to actually convert all of that to equity to benefit the company save on taxes and really start to partner with our with our biggest client which was a 100 million dollar construction management firm out of New York um and so so now uh 2022 we're finally scaling they were able to help us kind
of realize the platform they were subject matter experts for us and we're now far beyond better than whatever we had projected to be and as you can see now we have a huge performance ahead of us as in the company so when we start to talk about our what right so as a company we lived our problem um coming out of construction we worked for ultra high net worth families family offices we were challenged with the fact that we had to build really incredible
projects but then we had to manage them and we were unable to really transfer that so we got sucked into a life of private service and Estate Management and kind of thus the name State space we knew that we needed something that would scale and we and we really started to lose focus and this was this was the hard part of of the business um we were in a Big Industry we had a huge data set uh but we had no there was no technology right uh my partner and I we looked everywhere we tried to find Tech that would fit uh there was just
nothing out there that really solved the problems that we were faced with um and at that time we were doing 15 million dollars a year so a lot of people would ask me why I moved back into technology out of construction right I could have retired when I was 33 but you know my wife told me I'd be bored for the rest of my life so I started a technology company and so when we started to look at the problem our problem was that there was a massive breakdown communication expectations it was almost impossible to manage our clients and there's a lot of
Revenue there was a lot of stress and construction kind of beat us down so when we started to look at the the that Marketplace you know it was pretty much a typical um you know compound annual growth rate one to three percent um when we when we first got into the industry 2012 2014 around that time that's when we we had the idea so we started to to study the space and kind of during that time uh that that that that annual growth rate tripled right so now there's there's hyper growth money's more concentrated than ever in the world
and we're serving those clients and so it was at that point that we then looked at the space and we we were like well there's some players in there but there was nobody that was leading right there there was a blue ocean opportunity in front of us and we wanted to know why um and so you know we we felt like it was the um the inability to provide a platform that was simple enough to to use a lot of the technologies that are on here they're not SAS so they're all things that you can buy in Parts it
takes integration you know to start a conversation to solve a problem for what we were trying to solve for started at like sixty thousand dollars to talk to somebody another sixty thousand dollars to figure it out and maybe I needed an I.T team to run it and so our in our space we realized that SAS was going to be the thing that we could really have a huge advantage in right we didn't so custom became a swear word in our company right you could only be configurable we wanted to be easy for people to use I mean we wanted to have
people you know have fun using it and so so this is this is how we were able to put ourselves as a leader in a market space that in Marketplace that didn't really exist at the time and so why did we almost fail well our best attribute which was service was also our biggest enemy right so and and so this is now we fast forward we started in 2017 2019 uh June of 2019 June 4th I know the day um I'm broke uh we have you know zero
real SAS customers uh we're beta lists at the time so I didn't even have a a product that somebody could use um and we had no Revenue right we're bleeding and we're bootstrapped so it's myself it's my father we were the majority shareholders we'd put in all the money at that time and um and and we were just kind of going at it in the wrong way so we we at that point we learned to slow down to really start to speed back up again um and so we were able to
um we were able to kind of hit the reset button which you know some companies don't get the opportunity to do but uh the vision it was it was really great we knew what we wanted to be able to do with this business we knew that uh we were we had a problem that a lot of people shared in right and and approximately 4.4 million right and so um from just a domestic perspective there's a lot of people in the United States about 65 percent of the high net worth is in this country and they all shared our problem I mean we know all of
them it's a very tight-knit market and um you know and so we kind of started over again in the sun in the summer of 2019 um and and we started to speak to people we knew that we weren't alone right we started to go back out and validate exactly what was the problem what did they need us to really build for them um and and at that point we'd already studied the market we knew that we wanted to be an inclusive platform so a lot of great technology out there a lot of people but were using Tech to do one
or two things but then they had to integrate it or it would it would hit a roadblock and this Marketplace they needed a lot of things right they needed privacy they needed data security they needed us to be a lot of things and so back when we first if we rewound you know I think our biggest challenge in the beginning was just figuring out where to start right where was the best place to kind of like as someone said earlier do that one thing really well for somebody and then build value on that and so in this reboot if you will that's what we did we focused on physical assets we focused on property
management and the way that it fit our customers eye and we launched a beta product and we really Define the personas that we were going off after you know again I think from a Services perspective that enemy was like we do all this stuff for all these people and and they're all happy and we're just going to keep doing that but in technology that's a slippery slope and that's where we really face planted um but that was the kind of the best part of our story because we were able to pick pick ourselves back up and so now we're going to talk about how we did that right how did we pivot right and
this is the harder part this part sucked right I had 29 people I had to fire everyone down to six two of them in the back of the room with us still right now to this day um but that was a tough part thank God we were bootstrapped um because my father and I we were able to find a loophole in the IRS which I'm going to show you some artifacts on how we did that and I think that and then we had a pandemic we were able to the pandemic is part of our Survival Story which I'm also going to show you in a second but I think what's really cool here is that you know sometimes I think that as a
Founder we're in a position where we're out of cash right I could be out of cash right now maybe I am um but that's okay because there's always a way out as long as you have good advisors as long as you have a good Network you'll be able to continue to go on right and you can't be scared to Pivot and that's kind of the takeaway when we get towards the latter part of this but we converted 4.3 million dollars of debt into eight and a half percent equity because Iran is my father
and I'm his son the IRS saw that this could have just been simply a contribution so we were able to pay off some of the debt we were able to convert some of that debt to equity eight and a half percent we're able to write off all of the other into a preferred Equity instrument it was just seen as additional contribution and it was it was a non-taxable event and the cool thing for Iran is that um because that was his part of the investment if there's ever a change in control it will vest immediately for whatever the valuation is that we sell
for and he'll realize the benefit of that um the other piece of that is that he has capital gains issues so he can use that against uh future capital gains and he's been doing that so we figured out a way to fix what was a massive problem that we thought we could never overcome and and still be here talking to everybody today right and so we had a couple of problems we weren't truly SAS we were still doing Services we're still a licensed managed security provider like we were just doing way too much and
our company name was Griffin group global so no one really knew what that meant right it's my mother's maiden name I thought it was cool G3 not cool didn't make any sense and nobody bought us so we changed the company name to a state space and uh and then from there we were able to go through this process of doing this conversion really clearing our tap cable clearing the debt out of the business business in order to really be able to start raising New Capital again shrinking down to six people getting super lean
and how did we stay bootstrapped between 2019 and today well we've we converted uh 4.23 million dollars of service contracts into Equity uh we increased evaluation to 17 pre-money when we did that so I've still been able to hold on to about 55 percent of the company to this point and as we continue to scale I'll continue to just buy back that cap table uh covet it gave us almost a million dollars in free money so we had a lot of people pre-covered we let them all go but the the way that they look
they they SBA looked at that was that okay they counted us for the 2018-2019 time when we had a lot of employees so we were able to get a ton of free money a little bit of debt I put in another 500 our shareholders put in another 275 and now we're to the to the point where we've got about an 880k shortfall between now and the next 12 months and we're going to bridge that through shareholder Milestones so um and as you can see here our burn rate it's it's going to be close to about 4 million dollars and we're going to see
somewhere around 5 to six million dollars in performance and profits in 2025 which for us is pretty cool again considering remember just a minute ago I was worth zero dollars and I had no money um so what did I learn from all this say stay lean stay bootstrapped if you can um the less that you weigh the faster that you can go right so um I really really love that you always want to slow down to speed up right figure out what is that product Market fit definitely
get traction as soon as possible right don't be scared to put out a product that's not perfect that kills a lot of companies uh it it did kill us but again we were able to we we had a second life second chance you want to own your business right don't let it own you I think someone mentioned earlier today you want your business to serve you back right I mean you started a company in order to ultimately have success as an individual and keep a light Network right like I really again this group right way
stronger together met a few people I listened to everybody that I can that speaks I want to meet everyone I want to connect with everybody never been better better educated than the group of people in in founder path and or and again this is just in the last year um so we talked about the what we talked about the how um definitely uh failure I I feel is a good thing I think that uh you know you're never into a point where you think you might be dead but there's always a way out again that's going to
be your network that's going to be advisors but then you know talking about the why right so our service mindset actually did it well it was our enemy it still served us the best we we've we've now realized and things are coming to fruition that we did believe right we had a thesis we were able to realize that once we knew that we could we regained Focus we're now two inches wide and two miles deep we are the only Tech in the space that we serve and we're doing those things right the feedback loop that someone just talked about we
have those things we listen really well uh you can call us we will pick up the phone right so we knew that that service mindset was going to serve us really well in technology in our Marketplace because we built the company on relationship Capital versus you know going out and just trying to put a product in someone's hand and so ultimately that's been great um and SAS it's the best thing on earth right I love it I think that the the the the the the main purpose of having a SAS platform is to simplify something we
simplify something that's super complex right we came from a world where it was super manual a lot of time a lot of effort and and and a lot of times he would follow you'd fall short so um really being able to to kind of to come through all of that you know we talk about and I think in my takeaway you know we talk about pivoting and I think that the most important thing is that you're never going to be scared to Pivot um you don't always have to Pivot right it may be like right now we're not
pivoting we're repositioning ourselves we may do a a capital raise next year we may just take on debt from founder path and just keep all the equity I don't know where we'll be in the next 12 months but I do know that we'll hit a million in ARR we're going to hit two to three thousand paid members and I totally agree that you're better off with less customers that pay you more um you know we start at thirty four dollars a month and people think that's
inexpensive we only need to get to 4 500 members and we're cash flow positive right again we're taking a pool of 4.4 million so we hit you know 45 50 000 members over the course of the next three years which is our goal you know we're a 27 million dollar company and we're so we're killing it and uh and I think the last thing that I would say is make sure that you're working with selling to other SAS Founders so I've I've sold to other Founders through
founder path I use technology from other Founders through founder path like we're our best network of products and services not everyone's right for you but take the time to listen to what someone might have to say when it comes to what is their product what is their service because again if it's simplifying something in your life and it can make things better it could lower your cost why not thank you [Applause]
