How to Turn a $2m Niche Solution Into a $500m+ Brand New Category

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 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 please tell me welcome to the stage nicholas from chili piper [Applause]

not with a presentation uh volunteer to be interviewed by nathan that's called that is the best interviewer i've ever come across you know whenever you ask digs deeper and find the information so i figured that would be the best way to do it let's not bury the weed we're gonna 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 uh because

i was able to afford that those were expensive pants yeah trust me so this big theory the total round was 40 million and seven one second so the total was 66 33 in 33 out i see got it okay yeah actually and then we did another secondary uh in november and i told you it was six it ended up being 25. uh do you want to get right into that now everyone's curious go back to your life i've got to get back to the pre

chili piper the pre-chili piper all right so as you guys hear can hear i'm french i came to the us a while back mid-90s to go to stanford my plan was to move to asia because for some reason i wanted to be in hong kong and i met steve jobs my classmates steve jefferson invited steve jobs to talk to the business school students and sat on steve jobs sat on the floor at the time he was at the lowest he complained about the press and said

it doesn't matter i'm going to go back and change the world and i think i want to [ __ ] do that you know i want to be a tech entrepreneur so i did my first company ironically with john scully the very guy who fired uh steve jobs his funnies because goddard was talking about john scully as an investor he indeed he was not as texturey as he could have been but that first company i did was successful it was a photoshop for dummies um that was a software photo it was a software yeah it was at the time it's hard to

imagine for most of you but at the time software was on cds and you would chip it you couldn't download it it was too uh so anyway i did that and we did 6 million our first year 11 million second year and then we got an offer for 50 million and john scalia one five or five oh five oh five oh yeah fifty five zero uh i was a minority shareholder and john said ah we can do much better and i'm thinking i'm out of here so i sold my shares i did my first million i was in my early thirties and i doubled down on a second company

uh doing online uh universal shopping cart and garder was was asking who has done sas and i think i wonder if that would be called sas today it was an online i guess it was says 11 months into it i have an offer for 60 million dollars one six or six years no six zero i'm sorry i like get corrections for the french accent six zero and i have 72 percent of the company so i'm i'm about to clear 42 million and uh and the deal collapse and the dot

bomb happened and and to shut down the company actually i did a deal with microsoft but i i laid off 65 people and and you sold all your pants someday i'll get some fans so that that's the story and then there's a whole bunch of other things and when when we uh what year was it this 2000 yeah okay then i did a biometrics company that that i sold successfully uh then i have a little secret donating

like secrets so i sold my biometrics company in 2005 for a few minutes so it was comfortable but not full retirement money at least the kind of retirement i'm considering uh so thanks for being honest about that that's great that's right so so i i played around and actually in 2007 i started a company to do exactly what g2 does

and i failed i felt and i was uh my interest was picked when god 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 2009 crisis happened actually i had also my daughter got hit by a car she was three-year-old so i had to give up and i never made it work and i'm thinking that's i don't get it because it's such a good idea and so now i see g2 working on billions is amazing anyway

so it's an interesting story that sometimes you know you try and timing doesn't work or the angle doesn't work i had this purist id that i shouldn't pay for reviews you heard him say he gives five dollar cards to people to write reviews i thought that's not right people should just i don't know a bit of a idea at least raise your hand if you've ever paid for a review be honest yeah yeah yeah part of the game anyway so then i did some whole bunch of other things and and uh my i got remarried

my wife alina is romanian and uh ironically she's a tech person she went to polytechnica romania and he 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 you make money to yourself and and i kept

trying to convince her and and finally in 2015 she agreed and we started a company and that's chili piper and how much equity did you what was the split sensitive question it's a good question interviewer you're still married so she has 51 so though she has slightly less than me i thought it was fair that uh so i'm going to tell the full story of the company because it didn't quite happen that way

um 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 um 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 we're not going to get your commission if you don't update salesforce and say look we have other things to do how many people have said that i'm sure you're not getting your commission if you don't update the damn sales field yeah right exactly exactly

uh 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 i'm thinking well that happens right good ideas up at the same time and we're doing well we have a freemium product we start 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 that was 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 axel gave them 40 million that company is called relate iq that most of you have heard of then some vp at salesforce decided to buy implicit my competitor and i'm

thinking [ __ ] they bought my competitor what am i going to do and as i'm kind of recovering from that information i hear that mark benioff bought related iq for 400 million dollars uh and incorporate videotape q in the company so at the time i had raised angel money 1.7 million to do that company and all my angels call me and say you [ __ ] it in french you know they've put 430 million to

acquire capabilities you think you're going to win and so that's when i called elena to the rescue that's what really happened i said nina come help me i'm [ __ ] all right so now we're going to talk about uh um i mean is that first round on this is earlier this is pretty this is your funding graph this was before 2018 right was this chili piper no so this is this this company it was a shitty name it was called floating apps because we're floating in the cloud um that's also another reason why my wife should have

joined me because she had better ideas so she came in and said we're going to be called chili piper and everybody say white chili piper and mostly because it's cool the way we came up with it we were looking something around pipeline and and we thought there was a super cool ad for the champagne piper let's say he who pays the piper called the tune which is a saying in british like if you paid the piper called the tune so say let's call the company piper and that was of course not available so we found a play on the

word chili pepper chili piper i'm sure you get it and we launch it we don't get it [Laughter] to these days people call us chili peppers or red hot chili peppers so so we started and when i when we started with say we say okay what do we do what product do we do and and it was very hard to go back to raise money when i had just been rolled over by a bus right and so i told

elena we're just going to pick a small problem and make money that's what we're going to do and so we were talking to some of these people who had used our smart product and it would as i mentioned with going to emails contacts and calendar and one of these customers who using it for calendars i have this problem that when my sdrs book a meeting for an ae it takes them seven minutes because they have to go and look in the spreadsheet who's next in the round robin then find

the calendar create invites and the invite by the time they send the invite the prospect is gone and they cheat they don't do the right guy now can you automate that process and true story my wife alina said i didn't quit my job to do this shitty little product right and and i said you did because we need to make money and we have a product that people want to buy so so are you guys already you're already married at this point aoa marijuana a little more leverage

well yeah we waited so so uh so i went back to the company the company called five star that woman who asked us to say would you prepay for it and she said yes i would prepay i was i'm sure she would have paid much more but we were so desperate uh we we did the deal for 20k so they gave us 20k to automate the little and there were like three years worth of software anyway of 20k we get started uh and actually clear the way you cause a lot of people are trying to do that if they're moving into it was it a poc did you call her them a design partner to help you build the product together

because there was no software they could test yes exactly right so it's a good question because you have to structure it you have to be smart right you can't do a service uh the the fee has to be a prepayment against software because otherwise they're on the ip right if you do a service business you do develop for them and they own the ip so the is very important if you ever do something like that where you ask up front somebody who needs something and build it for them that you don't structure it as a service business because your

structuralities are the fee sometimes later we did acceleration fees so product roadmap acceleration fee so people give you money it's your money and they own nothing i've never heard of a product revenue acceleration fee that's a road map product i am not a trash guy i am a waste management consultant what the [ __ ] are you doing revenue acceleration fee forester forester as a customer

they wanted us to do something and they say we'll pay you right and say where would you we can't do something custom because then belongs to them so i say okay you pay me a product road map acceleration fee everyone's gonna we're gonna see some pricing pages over the world tomorrow this is that's gene round up that's a round of applause for this smart thank you just to be clear though what i'm more interested in is you're selling software that doesn't exist yet so as a sales guy how did you convince them to do that how did you sell them that you could actually build it was it a powerpoint was it a one-pager did you

bluff it in a figma design to make it look like it's already live how did you do it or the above yeah so so no but that you have to think uh uh she came to me with this problem she said i have this problem and i have not found a solution can you solve that problem so i don't pitch you know she she so the question is okay i solve it how do you pay me and how much right so we did what you said we did at the time sigma was not as big as it is envisioned

yeah something like that envision or powerpoint whatever but we did some specs we said look this is what you do it's going to look like and and pay us 20k i think it was two payments 10 and 10 and then and then go live and then we had a product and then we went to uh to um pitch it this time to other companies and our first actually paying customer was a greenhouse here in new york so we were very excited the company was five of us so alina myself a

tester in romania and actually two engineers in ukraine that's how we got started and from the beginning we said you know there are smart people everywhere we can talk about the ukraine navy and uh so we're very attached to ukraine because these two guys made us successful we thought there are smart people everywhere alina is romanian i'm french alina and i love traveling we want to be so we're going to hire people anywhere and let them work from anywhere so today we are 220 people we are

185 cities and 40 countries so we have people in countries uh i'm sure most of you could not place on the map like uh north macedonia or and what tool do you use for payroll uh yeah we used to do all our self-contract we do contracts contracts and now we're on oyster oyster okay yeah so that i was cheap we were bootstrapped i was cheap i didn't want to pay the fee to oyster so i said i'll just send them money it's okay i go to chase that stand

money is no problem but then when we did our b run uh the the attorney for tiger global said that doesn't look very uh safe like a from a liability standpoint right and um so we said okay we'll move to oysters no we know we move oyster we use oyster so that little product that we did um got us bootstrapped the truth is that we had a dry summer the first summer so we put this on the map so everyone

sees this timeline up here this is pre-2017 on the left side of the currency oh yeah that's what you have this is great 2017. yes so you can look up at that side too yeah you have something at zero there right uh so it's easy here all right so two we started in 16 uh that's right it's 16 here so we got 20k another 20k and then we had dry summer uh and then we in business with a whole bunch of big companies like square wants to buy

but it took us a while so in september we're out of money and i should mention that it's been a complicated story but uh with that attempt that i did to do a g2 like uh then i had a divorce and my daughter an accident so i was left i think nobody's going to cry but i was left with my belongings being a house in the hamptons and in the bmw so we liquidated that in 2016. we sold the house we sold the bmw we put all the money in the company and then we still

ran out of money uh in in october so we told our two ukrainians uh do you guys want to take stock uh for your pay in september and they both one guy said uh you know you guys are so crazy and may even succeed so he took the he took the he took the stock uh well you're talking like one two percent sort of deal it's a couple you got a 100 000 shares and we just did the secondary at sixteen

dollars a share so they got a hundred thousand shares and and so at the penny level or what was that a dollar exercise spread what was the price no shares were given shares there was a yeah and and uh as i said the secondary usd is 16 dollars a share so each of them that pair for the month was 1.6 million each yeah i'm sure they didn't sell all of it though they didn't sell everything everything they saw the chunk of it yeah so we we they made millionaires in one

payroll yeah we were very happy about that uh uh at the time it didn't look that way but uh but it did happen so so that that's 2016. and then we start getting some good business and and then um we start looking at now how do we build a real company because now we you know we we cash positive we can hire more people but but we we don't have a real business when you talk to vcs is that little ridiculous product they think the same as the leaner

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 say what is your job as an imminent sdr so you've seen on the website when people come to request a demo they submit your form they get a thank you page they say thank you somebody's going to call you well it's my job and i'm in manager i call them to book the meeting and i said it's

great how is that going for you and say it's going great i'm converting at 40 percent and i thought you meant 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 one percent right they they go for people but of course people never ask for anymore yeah it was nuts but i have the the cro of zoom info tell me i'm not touching it i'm converting at 40 percent 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 a real-time data augmentation data from the form data from crm we qualify we route we retrieve the reps and we we book the meeting real time and um so just to fast that's the core product that's a good product because the key thing i want to get into is how you went from single product great mousetrap to multi-production 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 is that when you started thinking no but so that's a fascinating thing that that if you look at this curve that's fascinating so 2017 we come up with this id and we build this product summer 17 segment the company segment does an a b test to see if it works they double the inbound conversion rate so they go they didn't disclose the number but they doubled it and they bought it immediately and then facebook comes to us and say we want to do that for our smb teams they buy our software we do a contract

with facebook by the way we have a no discount policy so i do about five rounds of negotiation with not negotiation with the procurement facebook i said but you know with facebook i say where we chili piper and uh five rounds and the same way we don't do that and the other thing not only do you know discount but we say you pay up front so facebook say we pay 60 days and i said uh

so you have all the money in the world we have no money why would you would have found you right you don't do 60 days if you think you pay your 60 days anyway in the end they said okay and and they and we did a quarter million dollars with facebook so over over time so so now we're thinking we're golden we have this strong product it doubles inbound conversion rates and and um facebook is a customer segment has proved it and and nothing happened

amazing our previous product uh what we call handoff thing continues growing but that new product nothing happens and you know i take the blame for maybe doing a poor job marketing but for the longest time sales people were resistant they had the sdr team they would stay with it they would not want to uh to make the change so what you see on our curve there in 17 we we had this product already but it was not happening so all

the money was being made for our legacy product and and was uh pushing our sales guys say guys you have to push the new products it's much more powerful it's much bigger on that and then finally eventually the market reaches a critical mass that people know and discuss and and as you can see in the curve then we 2019 we started doubling and we went to uh seven million uh what was valuation that year 2020

so the valuation in uh 2020. so we did our a run in 2020. if you go back 18 million around 2020 80 million valuation no no no 15 million round right that's that what you did in 2020 yeah that's right youtube isn't wrong yeah yeah yeah you made me think my data might be wrong i almost should no let's go back to the data yeah it's going to be small for you bigger over there too but the revenues go back to the revenue revenue okay yeah the curve was easier so in 2020 uh

so what happened uh it's a funny story in 2019 no 18 social capital came to us and said we they understood that they were lucky and they gave us a term sheet to put 2 million on 20 million pre and then as luck would have it social capital imploded you guys remember social capital expects we meet everybody we have the charm sheet we at the lawyer fee and then the guy decided to dissolve the venture firm

it's like as you can tell my life has been a bit of an adventure um so now we have no capital uh social or not zero so we continue um and then cover it happens and then when copied happens then i freaked out because i had seen the movie before where you know you have to think of this company in 2000 where we're 65 people we're doing great and then everything collapsed i'm thinking the same thing is

going to happen again everything is going to shut down i'm going to lose my company so i took a payroll protection program loan 350 1000 hours and we held tight and as many of you have experienced some things went down like we you lost a few customers but others came to us and said we need to book more meetings and online anything so we continue growing and then all of a sudden vcs came to us so

every bc firm stopped investing in march thinking i wonder what's going to happen then they saw that the world wasn't collapsing and they think [ __ ] we've lost three months of investing we need to find these good companies so all of us in out of the blue i am getting tons of calls from vcs um vacationing in france the people come and say your dinner is paid for and you're out of money no another money we yeah we bootstrap we're making money

so i could pay myself dinner in france um and and the guy comes and say it's paid for and a free bottle of wine i'm thinking i think it's selena right so i think it's not my birthday and but she always forgets my birthday anyway so she would have known as one of the vc firm say we sent you a term sheet we think you're exci your thing is amazing and they sent me sent flowers to you

know all the courting all that so eventually yes i said okay let's do a deal so that deal was june 2020 it was base 10 and they offered uh 15 on 55 pre and there's a 20. 20 so we're doing around four plus million so it's it was around 12x there was a number run rate uh so we took it we took this secondary our balance sheet

so uh the reason why people say it's 18 because there were three million secondary okay yeah but at that price alina and i had no interest in sending any of the shares because so it's just the very beginning and and the end role that by the way i didn't shut down the company when when the thing happened with the sales force and the thing i took the same company i renamed it and i carried my android with me so i didn't know this is the right thing to do for early backers yeah at least it feels good when making money yeah so that's what i did so even though we bootstrapped some mandrels from a

previous life of sin so we do this round three million of a secondary and then we keep growing and then as part of the run with base 10 google came so gradient radio adventures they put three million so the guy coming on stop real quick we're out of time so we either do group photo and lunch or are you guys just happily allowed to go five more minutes with nicholas should

we keep going there we go okay i'm sorry uh i'm from the south of france i took too much do you want to talk secondaries okay no i'll tell you no if they didn't clap you're off stage would go to lunch people love you so keep going okay all right so now another fun stuff uh the google guy says there are crazy people out there called tiger global they go and drop sp uh term [ __ ] that are nuts get on the call with them and i say but we're not raising money i have we still have the money let's get on call with them i cannot call with john

curtis he says okay we love your business oh good literally he asked me ten minutes of question he said okay what price would uh which is revenue at this time so now we're at seven seven million yeah 20 20 seven so you see that seven right we no it's it was a march 2021 so we just passed seven okay yeah so we passed seven and uh he said what valuation would you do a deal and we just did that deal at uh 55 pre so i'm thinking you know if he if he

gives me 150 it could be cool but i say nothing he said how about 30 million on 320 pre yeah exactly i think we all we should happen to us you know there you go you're right these guys are crazy i said let's shake hands and we shook hands on zoom you know like so and two weeks later uh immediately after the term sheet and and three weeks later the money in the bank they were the easiest people to work with they didn't ask for a board seat and so it was amazing

and so then we did the secondary and then we i sold a little bit uh and and my angel also seems such a high valuation so we sold 33 million worth of stock altogether employees but then it doesn't stop there then the company with the money grows faster as you can tell and we go from seven to six 16. so we now more than doubling so then more people are interested and and another firm comes and say i want to do a secondary

on a 500 million valuation so now we are october so last october to which i said the world africa baby so i called the company says when offered 500 do you want to beat up so we got to 625 yeah so that's exactly i feel the same way i see this pair of pants i'm gonna buy myself

and the club and the car is very nice so as it's ridiculous about a porsche about a boat about a house in the hamptons you name it within two months i bought the whole thing right before summer and yeah so we did 625 it was the height of the market uh we that was uh in the end well at 500 million with 10 million worth of sale at 625 with 27 million so 27 million uh secondary

and uh and that's what happened 49.50 x yeah yeah so very high multiple in the question then everything collapsed but we cool because we have money in the bank we're growing we have everything so then back to the topic of the of the discussion going from these little products we did when we did this concierge product we realized that um so we doubled in non-conversion we realized that the other friction point in the inbound process so we will extend 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 meetings much faster than anything that's out there we're helping uh lead distribution to go faster for those who are not ready to book so we're expanding on on this value proposition of inbound conversion and 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 uh yes that's right davis [ __ ] we 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 uh and you don't want to be in that position where somebody comes and just swallows you it happened to

a company called serious insight this is integration with salesforce and salesforce said we're going to do it ourselves and boom the disappearance so at any time we're looking for something that would say we the gravity will and right now we see in one conversion platform we uh we there's no salesforce could do it but they would have to offer something competing with us for people to choose the salesforce solution just like when cerseforce 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 on gravity well so shits and giggles aside um we love taking advantage of a vc that is just like hype market want to get into good deals makes complete sense um 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 um

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 uh yeah we care because uh as uh mikita was saying when we started the company we wanted to make money but not only to make money uh we we wanted to first it's a journey we want to take the company public we want to we have this beautiful journey where we have 220

people from different nationalities living to getting together working together when we raised 33 million we went to the board last year and we said we're going to take one million and create a foundation and the world say one million maybe it's too much no it's not too much and we put a foundation for peace and so actually we're very involved with the war in ukraine because we have this one million dollars to deploy uh um helping it was like within the writing on the wall the foundation is about

non-violence and promoting peace and and right before the invasion we had our russian developers work with the ukrainian developers we took a screenshot of them on zoom and you say would you really want these people brothers to kill one another right like it seems so crazy that that's what happened yeah that's right so uh so the answer to the question is we're enjoying the money but but do we on a mission and and nothing's going to stop us and nicholas

what's the site where folks can check out that that charity set up against what's the website for the chair oh yeah it's called citizens of our planet.org citizens of ourplanet.org the idea when we started let's say we were brothers and sisters so i'm a bit extreme on that i'm french i pay taxes in the us and i feel okay i pay tax in the u.s so that maybe we have social security for some people in federal attacks or so say in michigan and i don't care more about the guy in michigan than the guy in belarus i care

the same so my view that at some say we should have global taxes uh you know we should have known we should have nation for soccer tournament that's cool but not for anything else not for fights so so that's that's the direction you want to take that we we all brother and sisters and we all help whatever country and whatever location nicholas with chili piper give it up