How Aptem CEO Richard Alberg grew Aptem to $17.9M revenue and 170 customers in 2024.

Optimus helping companies big training companies in the UK teach more people faster in a more efficient manner they have 170 customers today that pay on average $40,000 per month for that software they broke about 8 million bucks this year in Revenue up 20% year-over-year from 6.5 last year which we love they've got a nice team uh 120 folks today 70 on product five quota carrying reps last valuation 3 million round last year out of 40 caught 40 million pre-money valuation as Richard looks to continue building business hoping to hit N9 or 10 million of Revenue next year hey folks my guest today is Richard olberg he's a Serial human capital entrepreneur fascinated by technology and how he deploys it to prove and how we deploy it to improve our lives he's motivated by working with interesting and capable colleagues married with two adult children and also an instrument rated pilot now building a SAS for vocational training providers Richard you ready to take us to the top absolutely let's go for it all right what's an example of a vocational training provider so in the UK we have uh a regulated term you use it in America as well called apprenticeships and essentially you can go to college you can go to university you can go to school and you can be a student and study but in the UK there's over three billion a year being spent on people who have a job who are in employment but are nevertheless learning skills to go one step higher so it can be anything from learning how to be a hairdresser to learning how to be a software enger to being a police Constable or a nurse adult care etc etc etc it's a big Market half a million people a year in the UK being trained 1,500 different organizations doing this training and my company provides technology to those organizations in order to run their business got it so the org would I want to be I'm in the UK I want to learn how to cut hair and be a stylist the the company that is going to employ me would pay for your soft teach me how to be a better stylist at their Salon with one little subtlety the company that employs you would employ a training company who would be delivering to you so you might work four days a week in the business working in the in the in the salon but half a day to a day a week you'll be studying who who's an example of a training company that might teach uh someone that wants to cut hair that sits in between the hair cutter and the salon there are many um uh learning curve are one of the big ones um hob salons they're a salon training company but they Al a salon operator themselves but they also do training the key thing in the UK is it's regulated there's a bit it's not a tax break in fact it's the opposite every firm in the UK with a payroll of 3 million or more has to pay half a percent of that payroll into a tax that goes towards funding vocational training so what you've got is this big big pot of money for training and it's use it or lose it because it's got but because there's government involved there's compliance and Regulation and that's the bit that's we're a little bit different on so you're selling the learning curve and hope Salon we H Salon learning curve life time there are 40 universities in this country who use our technology we are the largest provider in the UK of technology for this type of training so Richard how many paying customers do you have including the 40 universities in hopes sound about 170 okay 170 and and how do you price for them is it per trained employee or per seed or what we currently do per learner per month okay and what so if you've got a thousand Learners in training is a thousand times that amount each and every month and what is that average amount per learner per month oh the higher level is about eight pound and then it reduces down with volume so a large customer was about three pound something like that but that's very high volumes um a large customer will spend a couple of 100,000 300,000 a year with us a small customer maybe 10,000 a year with us and a sort of typical customer 40 to 50,000 a year with us oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 287 interviews I've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different valuations inside of your founder paath dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is 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time so again without digging into too much detail in the UK for an apprenticeship course lasts a minimum of one year but where we deal with universities often a we call them Learners the Learners are on a three or foure course because they're doing a degree I see I I see okay so 170 customers paying on average $40,000 per year would put you at about 6.8 million of AR today is that accurate yeah about that a bit more than that what are you talking dollars or Sterling let's do dollars dollars were about eight million-ish about 8 million-ish okay and do you remember uh just so we can get a growth rate where were you exactly a year ago uh we would have been something like 20% less put it this way we have for the last four years done over 50% year- on-year growth but we've recently run into a problem which is the bigger you get um the harder it is to maintain your percentage because each month we throw in two three more customers maybe four customers in a good month but the bigger we are it's a denominator you know so so the issue we have is how you reprice the existing book of customers that you have as because the main contributor to growth has been the number of new customers we secure each month we have very very low churn but we have only two or three well in financial terms last year was 2.3% that's on a on a revenue basis or a logo basis Revenue basis no Revenue basis okay sorry 2.5% that's for the year 2.3 I think it was 2.3 was last year's CH in financial terms 2.3 and that's gross dollar churn yes okay did you have expansion Revenue to get above 100% net retention um no that's our problem we will soon because we're now adding in adjacencies additional things we can sell but for the first three years of our growth four years of our growth we haven't had anything additional to sell to a customer Richard sorry I don't understand that if you've got if you've got learning curve paying you $1,000 in one month for 10 trainees per month if they love you and they expand to 20 trainees per month you have natural expansion Revenue built in why don't you have Revenue that's not how business works we have every training they've got there's no choice for our customers they run their entire business in our platform even the way they get paid is via the um Financial calculation that's run by our platform okay but Richard same question if hop sound was using you effectively to train their customers they would have had hop sound would have had customer growth the past couple months and their customer growth would have been your Revenue growth yes and some of our customers do better and some do worse and in fact one of the features we've had in our business is we've gone for larger training providers so when we started we would get any customer we could get didn't matter we would we were happy to sign anyone as we got our you know made it started to progress we started to think a little bit more about the kind of customer we want and we went for either large or mediumsized training companies and didn't go for small ones but the one challenge with that is that your volume discount starts to hit you a little bit more because if you're mainly winning bigger companies they tend to get more volume discount so that's had a certain I understand but my my question is if you signed hop sound a year ago right for 10 for 10,000 trainees per month on average and Hope Sound is doing well they're growing yes because partly because of your software and now they train 15,000 per month you should be get PA more from hopes sound for the extra $5,000 training per month that would be Revenue you're absolutely right if there was such a strong correlation between our software and our customers performance now our software does three profound things for our customers operational efficiency that's not necessarily quality of delivery sorry Richard I don't mean to cut you off but sorry you said you price against number of trainees this should be a very binary thing hop sound has more trainees a year later that should mean more revenue for you if you price per trainee only if our customer has growth what if there isn't growth okay so why aren't they all growing that means your software is not working well that's one way of looking at it I would see it another way the market we sell into is a very competitive market is driven by a lot of macro issues that aren't necessarily just about the software so some training providers grow some shrink some pull out of particular markets some sectors like Hospitality were having a hard time therefore there were fewer Learners in training the market has many Dynamics um our software is not focused on quality of training so much as the efficiency of operation the compliance and the datadriven decision making for those running the business so while it clearly does influence and quality to some extent there are many other variables the quality of the curriculum the quality of the tutors and organization employees how good they are at selling to employers their services those things will affect why some win and some don't but the apprenticeship Market has actually been declining by a few percent a year in the last handful of years for a variety of reasons due to funding so it's not we can't just ride a rising tide what we do is we increase our market share and that's what we have been doing yep that makes sense okay that makes sense um take me back do you remember your first million dollar Revenue Year yes that would have been about 2 18 or 19 something like that 2018 okay and when did you put this all on a big timeline for us when did you launch the business well I launched in the vacational training space in 2016 that was our first customer in this Market was 2016 the company was being run by me as a bit of a lifestyle kept me busy but in using the technology in a totally different way for a handful of years but our vocational training which is where our business is now our first customer was 2016 okay when did you write the first line of code for the platform that was written in 2009 okay and so between 9 and 2016 were you just not full-time you had a side gig or something to pay the bills no no no we were so so what happened we were in the employ we were in a different Market we were using our technology to deliver to organizations doing employability contracts and we did very well in that but it was a fundamentally cyclical market so essentially when unemployment was high our business was very buoyant when unemployment came down our business also went down that was not a healthy Market to be in therefore we needed to Pivot into a new space understood that's when we picked in vocational training talk to me a bit more about how you've capitalized the company uh are you boot trp today or have you raised money no we've raised about eight eight or n million okay when was the first round closed and for how much 2018 and we probably about one and a half two million okay and what made this I guess I guess most people sell about 20% of the company in their seed did you do the same about 20% Equity uh yeah maybe a little less I had funded it beforehand I had put quite a bit of the fund I had put in the first moderate slug of of capital myself so we had already got to as I mentioned we were seven figure income by the time we did our first round yep so that would been like two million on a 10 point a 10 million post do you sell 20% something like that yeah something a bit less than that but yes okay how much I mean I always like to know how much Founders put their own money on the line ahead of that right I mean did you put like a 100,000 bucks into the company before that no I put about one and a half million in 1.5 okay so did you already have an exit how did you how did you get so rich where did you get your capital from i' I'd already grown one company sold it to a public uh US public company that's why this business started in 2009 I was bored I I had sold my last company I had done my exit my um you know earnout and I just wanted something to keep me amused while I was thinking of the next thing to do so that's why I started a business and we did quite well quite quickly but in a cyclical market so I either had to shut the company down after we' done very well financially but just wind it down because it wasn't a good long long-term Market not strategically or pivot into a new space so the other thing I did is I actually started our first customer so one of the challenges is when you are an end-to-end platform how do you win your first customer when people say it's a brilliant idea what you're proposing doing but who have you done it for for before and you say no one and um that's a bit of a challenge they says you want me to trust my entire business on your platform so in fact I set up a training company with a partner uh who was our first customer and we grew that to be the f EST growing training company in the country we grew it to over 20 million in revenues in three years and sold private Equity what was the name of that company Cornell c r n d l Corell when did you launch that company what year 2016 it was our first customer okay and and sorry you've grown that today it's doing 20 million a year in Revenue it's a sign it's doing a lot more now we sold it after three and a half years for 45 million to private Equity okay got it so you built that from 2016 to 2019 to really get close to your Market Professional Services train them you exited that in 2019 for 45 million bucks reinvested that money in your software solution and now you're fully focused not quite forgive me 2016 started that first customer but then we also the moment we were doing that four five months later we started winning other customers as well the idea was to use a first customer to show it could be done and to learn so meanwhile that company was growing but so was aptim so aptim went from one customer to 2 5 10 15 Etc um then we sold that business to private Equity at the end of in November 2020 and by the way we sold it for that number in Sterling not dollars the numberers a bit higher but by the time uh I had made that sale um we had raised quite a lot of money through external VCS so although I put the first slug of money in uh the subsequently it was through institutional VCS got it what can you fill out the capital St for me so 2 million seed in 2018 when was the next round or probably a year later we did almost round a year eight every 18 months for the next handful of years to end up at about eight eight and a half n mil when was the most recent round Richard a year uh August 2022 I think okay and how much was that was that for two million as well about two to three million I think it was slightly closer to three million okay interesting so C 2.53 million and would you consider that like your series A or B or C or what who knows the terminology it's early stage I mean it's growth stage okay it's growth stage because we're no longer proving product Market fit that's ship is said I know trying to get is a series a most folks are selling 10 to 15% of the business were you in that same range when you close that three million uh each time would have been so the last valuation was uh just shy of 40 million just under 40 million pre money or post uh pre money pre so about 43 million post money something like that something like yeah I'm sorry I should know exactly that number but it's of that ilk it was in the uh late 30s early 40s um pre money did the last round understood we're running short on time here but flesh out the the rest of Team you have building this thing how many folks are full-time today we now have about 120 people in the company wow how many how many Engineers about 60 70 people in the product and in function wow how many quarter carrying sales reps about five okay four four to five okay very cool and where do you think growth looks like for the next 12 months where do you think you end next year at 2024 so um next year Well if our financial year ends in um April so if we go to sort of just calendar year we'll probably get up to in dollar terms something like 9 9 million 9 a half million but we're about to have some very significant growth because we've been investing significantly in large language model Solutions and if you think of the power of a portal you know of course you can do everything we're proposing doing outside of our platform but doing it from within the platform is so much more capable The Prompt engineering driven by the information in our database you can just achieve so much more and education or vocational training is one of the really strong use cases for large language model uh output so we are seeing that as potentially doubling our business just through selling more to the customers we've got we're certainly rooting for you we're out of time let's wrap up here with the famous five number one favorite book um gosh I haven't read for quite a while I'm actually I'm reading um uh come back to that I'll just remember the name because I've worries it number two is there a CEO you're following or studying uh I I'm really impressed by saki nadela the way he's turned that business around is is absolutely phenomenal by the way the coming wave is what I'm currently reading by Mustafa sullon and it's frightening and interesting number three what's your favorite online tool for building aptum mind jet mind manager I use mind manager extensively for doing my Planning number four how many hours of sleep do you get every night five to six and what's your situation Richard married single kiddos married two grown-up kids that's awesome okay and can I ask how old you are I'm 58 last question something you wish you knew back when you were 20 how to delegate guys there I have it aptum is helping companies big training companies in the UK teach more people faster in a more efficient manner they have 170 customers today that pay on average $40,000 per month for that software they broke about 8 million bucks this year in Revenue up 20% year-over-year from 6.5 last year which we love they've got a nice team uh up 120 folks today 70 on product five quota carrying reps last valuation 3 million round last year out of 40 caught 40 million pre-money valuation as Richard looks to continue building business hoping to hit nine or 10 million of Revenue next year Richard thank you for taking us to the top thank you for really appreciate it Nathan have a good weekend one more thing before you go we have a brand new show every Thursday at 1:00 p.m. central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend dashboards their expenses their revenue arpu CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews 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