Tilled: How Firing Customers Helped Build a 7-Figure SaaS – with Caleb Avery [412]

This is a machine-generated transcript.

[00:00:00] Omer: Caleb, welcome to the show.

[00:00:01] Caleb: Thanks for having me on today.

[00:00:02] Omer: My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:08] Caleb: I do. I'll try not to to butcher it but it's a, it's a Dwayne Johnson quote. It's a little, little bit of the rock for you here today.

[00:00:14] Success isn't always about greatness. It's about consistency.

[00:00:18] Omer: Love it. Love it. Very relevant for founders.

[00:00:21] Caleb: A hundred percent. Yeah. I mean, I feel like for, for me, you know, it is just showing up every day is, is half the battle. And the reality is like, there's no such thing as an overnight success. Like I, I've been at this five and a half years and I feel like every day I'm still, you know, learning new lessons.

[00:00:35] Omer: Yeah. So tell us about Tilled. What does the product do? Who's it for and what's the main problem you're helping to solve?

[00:00:42] Caleb: So at Tilled, we do what we call PayFac as a service, which you're, if you're watching at home, is on this obnoxious neon sign behind me. And, you know, when we think about the concept of PayFac as a service, it's about turnkey white labeled payments infrastructure for vertical software platforms.

[00:00:57] And so what does that mean? So if you're the, the founder of a vertical software business serving, you know, merchants in, let's say the dental you know, vertical, so. For those dentists, we provide all of the underlying infrastructure for them to be able to process payment transactions, and ultimately for that software company to generate revenue stream from all of those payments.

[00:01:17] And so we're typically replacing solutions like Stripe to allow those software companies to monetize their payments.

[00:01:23] Omer: Got it. Okay, so, so the use case is less about a SaaS company that you know is selling a subscription and would say, okay, instead of Stripe, I'm using Tilled. Presumably they could do that if they wanted to.

[00:01:40] Caleb: The vast majority of our clients do that as well. And so for probably 90 plus percent, you know, of our clients, they're setting up themselves as a merchant for their SaaS account to save them money, you know, on processing those SaaS subscriptions. But that's really like an ancillary benefit of their relationship With Tilled, our focus is really on helping them scale up the underlying customer base.

[00:02:01] So the small businesses lever leveraging their platform to drive more volume, you know, through their clients.

[00:02:07] Omer: Got it. Okay, great. And give us a sense of the size of the business. Where are you in terms of revenue, number of customers, size of team?

[00:02:13] Caleb: Yeah. So Tilled, we've raised about 40 million of, of capital to date.

[00:02:17] We've got about 40 people on the team as well. Service around a hundred vertical software businesses and at this point doing strong seven figures closing in on eight figures from a revenue perspective.

[00:02:28] Omer: Great. The business was founded in 2019, so why don't we go travel back in time to there?

[00:02:37] Like what were you doing at the time and, and how did you come up with this idea for this, this business?

[00:02:42] Caleb: Yeah, so at the time I was really kind of between ventures. So I had started my first payments company when I was 19. Going door to door selling payments to small business owners. Probably not what everybody was doing at 19, but that was the, the path.

[00:02:55] You know that I started on, and between that first company Tiled, I was doing angel investing and consulting for vertical software platforms that were trying to get off of Stripe and start generating revenue on their payments. And so really the, the problem and the the motivation for tiled came through personal experiences with vertical software businesses that were typically anywhere from like a hundred million to over a billion dollars of annual volume that just weren't generating any or not much, you know, revenue on their payments. And so, you know, I saw this opportunity and after a while, convinced myself that I needed to go start another business, which became Tilled.

[00:03:31] Omer: Got it. So just give us like a, a, a 101 on the economics here in, in terms of why a business may not feel like it's getting value from using Stripe and what kind of opportunity that created and then what was the kind of the, the, the model you introduced instead.

[00:03:52] Caleb: So, you know, if we take a, a vertical software business, let's say doing $10 million a month, you know, in, in payment volume on Stripe, they're likely passing through that 2.9% and 30 cents from Stripe, you know, onto their clients.

[00:04:06] The practical reality though, is it typically only costs more like 2.2%. To actually process those payments. And so for a lot of clients, they're leaving something like 80 basis points or 0.8% on the table. And so on every $10 million that you're processing, you're talking about $800,000. You know, in, in revenue.

[00:04:27] You know that, that you're leaving on the, the table here. And so it's a, it's a very significant, you know, amount of money, you know, at the end of the day.

[00:04:34] Omer: Right. So that, that was the, basically what you were hearing when, when you were working, you know, when you're doing this consulting work, that this was as an ongoing issue that kind of sparked the idea here.

[00:04:45] Caleb: Yeah. They didn't want to give away, you know, a million dollars a year in, you know, excess revenue to, to Stripe.

[00:04:51] Omer: Let's take a quick breather here. You know, I've come to realize that some tools can really change the game when it comes to building a business. That's why I'm excited to tell you about Lead Feeder, a tool that helps you cut through the data and turn those website visitors into solid leads.

[00:05:06] Lead feeder shows you which companies are checking out your site tracks their behavior. And integrates all this with your CRM, the result. It's your secret weapon for engaging leads and helping your team turn website visitors into sales. Head over to lead feeder.com/try for a free demo and get a free extended premium trial when you let them know that you're a listener of the SaaS podcast.

[00:05:29] That's lead feeder.com/try. Alright, let's get back to the show. So how long were you doing that consulting work? How long were you hearing about this problem? I. And and how long did it take for you to say, okay, I'm gonna go and build a software business and, and solve this myself?

[00:05:46] Caleb: Yeah, so that was from 2015 to 2019 that I was doing the, the consulting and, and investing.

[00:05:51] So that was about four years of, of hearing the same problem, you know, over and over and over again. And then there was a period. Of probably about 10 months where I was solo founder, really exploring the, the early iterations, like is this actually a viable business opportunity? And so for me, it started with this hypothesis where from all of the, the conversations that I had had with customers, I felt like we needed to get down to a one week launch to really be able to scale up this business and, and solve this problem in a viable way where.

[00:06:22] All of the existing solutions were about a six month process. And so it took myself about 10 months to say, Hey, what does that path look like and how realistic is it to go from a six month process today to a one week process? And then convincing myself that I was the right person to, to go, you know, solve that problem and take on you know, that journey.

[00:06:42] Omer: And this launch is like, you're not talking about launching your startup, it's about how long it takes a customer to get up and running with a new solution.

[00:06:49] Caleb: Yeah. Correct. And so the, the problem for a lot of these software businesses and why they were staying on Stripe as long as they were, was the integration time and the implementation time to get up and running on a competing solution.

[00:07:01] And so I was, you know, suggesting to them, Hey. You know, we've got this great solution with, you know, Card Connect or Pivotal Payments or Paysafe or whatever, you know, the, the solution is their engineering time. Engineering team would go look at the, the developer docs and say, there's absolutely no way that we're gonna go divert, you know, the next couple of quarters of our roadmap to implementing this.

[00:07:21] And so they would end up, you know, just staying on Stripe. And when I would go through, you know, those customer interviews and say like, well, hey, what would actually make you, you know, consider leaving Stripe that time to market? Was the number one, you know, most consistent piece of feedback that I got.

[00:07:35] And so that was the, the first, you know, problem that, that we needed to, to validate that we would be able to, to solve.

[00:07:41] Omer: Wa was there any concern about trust and not, not necessarily with with you, but. They may not like paying that much money to Stripe, but it's a, it's a known quantity. It's established.

[00:07:55] It's not gonna disappear tomorrow. And when you are offering an alternative, a new solution, an unproven solution, there's, I guess there's gonna be a concern that is this thing actually. Gonna stick around, are you actually gonna grow this business? It was like, what kind of reaction were you getting from people in, in terms of just that specific issue?

[00:08:16] Caleb: Honestly, it wasn't that big of a concern for, for me, which maybe is just a rational confidence, you know, on, on my behalf. But I think if you think back to how I started my career in payments, I was a 19-year-old college student convincing small business owners to trust the lifeblood of their business, which is their credit card processing, you know, to, to me.

[00:08:34] And so I think I learned pretty early on that. That, you know, small business owners really hated a lot of the incumbent you know, payment processors. And were very willing, you know, to, to try, you know, something different if it would solve, you know, their challenges. And I think I saw the, the same kind of mindset and behavior, you know, with these software companies were, you know, not to say that they were quite desperate 'cause I don't know if it was quite to, to that level, but they were, you know, borderline desperate, you know, for, for an alternative you know, solution.

[00:09:01] And so if we could inspire the confidence. That we could solve, you know, the, the challenges that they were facing, that just wasn't really a major, you know, concern for me.

[00:09:10] Omer: Right, right. Okay, great. So you, you've identified the opportunity and you said you spent, you spent about 10 months having these conversations and, and trying to just validate that, you know, there was a, there was a business opportunity here and what kind of business you needed to build.

[00:09:24] Wa was that when we, you, we were talking earlier, you said. You told me about this kind of concept to market fit, right? Getting to the, is that basically what you were doing during those 10 months?

[00:09:33] Caleb: A actually, no. The, those first 10 months were, were really me convincing myself that it made sense to continue pouring my own, I.

[00:09:40] You know, time and money into building this out. Before I started bringing on employees, before I started thinking about, you know, raising outside funding, it was really me validating the, the idea, you know, at all that, that concept that, that we talked about, you know, beforehand in terms of going from concept market fit to product market fit was probably a.

[00:10:00] About a year after that. So after we had raised outside capital and we, we launched the, the concept of PayFac as a service. We went out to market and we had this tremendous interest. And so, you know, early on in the business we were actually overwhelmed with interest from vertical software companies that were really wanting, I.

[00:10:17] To get up and running on till. And so as a, as a founder, we're like, oh, great. All of our problems are over. We have all of these customers, you know, that want to, to use, you know, our, our solution. And what actually ended up happening was, you know, a large percentage of those clients turned out to be, you know, a waste of time and resources, you know, for our business.

[00:10:35] And so we really had this, this struggle where we really needed to identify the right ICP or ideal customer you know, persona where we said, Hey. These are the types of customers that are finding success on the platform. We need to say no to every opportunity that doesn't look like this. And since, you know, we made that change, you know, the business has, has really hit an inflection point you know, in growth.

[00:10:57] And we're growing, you know, close to 500%, you know, year over year at this point. And, you know, feel like there's, there's no stopping us now.

[00:11:05] Omer: Awesome. So, okay, so you, you, you went through the validation for 10 months, and then how did you go about building the product? Are you, are you a, a, you know, a technical guy?

[00:11:21] Did you have to rely on finding a developer or a technical co-founder?

[00:11:25] Caleb: I'm not a, not a developer or a, a technical person. I'm, I'm on the, the sales side of the, the business. And so for me it was a lot of trust, you know, in, in bringing on a CTO to help us build out the team. And I, I still remember the interview with Matt, where he told me, I, I was like, rate, rate yourself as a developer.

[00:11:43] And he was like, D minus. He's like, you want me writing code, you know, for, for the least amount of time possible. He's like, I'll do it. But what I will do is build you a world class team. And that's really, you know, what we brought him in, you know, to, to do is really assemble the, the team that could build, you know, that first iteration of the, the product.

[00:12:00] And, you know, very grateful that he was able to do that.

[00:12:03] Omer: Did you raise money before you started hiring people or, or you kind of bootstrapping initially.

[00:12:08] Caleb: We were bootstrapping initially and it was a lot of kind of my own personal money and then some, some friends and family you know, capital in the, in the early days.

[00:12:16] And then we raised a small, like $2 million outside seed round in late 2020. And then, you know, from there, we've since raised, you know, close to 40 million of outside capital, including two, two rounds, actually back in, in 2021. You know, in the early days of the business.

[00:12:34] Omer: Great. Okay, so you, you hire Matt, you, you, you're starting to build out this, this team.

[00:12:40] How long did it take to ship that first version of the product and, and how good or not so good was it?

[00:12:49] Caleb: Yeah, I think that process was probably. 10 months or so. And it was terrible. I mean, like truly, truly just terrible. And we've since rebuilt, you know, that entire you know, platform from the, the ground up.

[00:13:03] And so realistically to get to like a proper, you know, ready to sell solution was. Probably more like 18 months you know, from, from that point in time, you know, when we, when we started building. And so yeah, it was a, it was a very long path to, to get to, you know, that sellable solution. I think what we didn't realize was the table stakes functionality required to compete against, you know, giants like Stripe and, you know, addon and others is pretty high.

[00:13:28] It's pretty high bar. Which is probably why not that many people have attempted to build, you know, what we've built. 'cause it actually takes tens of millions of dollars in several years, you know, of time you know, to, to build, you know, a sensible solution. And even, even that first solution, you know, kind of 18 months in, you know, still, still left a lot to be desired.

[00:13:47] Omer: So gimme a couple of examples of, of what was. What was problematic with that first version of the software? Why do you feel it? It was, it was terrible.

[00:13:56] Caleb: Yeah. So when you look at the, the first, you know, cohort of, of customers coming onto the platform, about 80% of those customers did full API integration.

[00:14:06] So they didn't leverage any of the like pre-built UI tools that we had put together. And when we went out. You know, and interviewed the, the first you know, clients, it was all about branding. They wanted their brand to be front and center with their merchants. They didn't want tiled, you know, on the onboarding experience or on the reporting experience.

[00:14:23] And so we rebuilt the platform with White Label as a first class citizen. And so if you didn't want the tiled brand, you know, to be shown to your customers, you didn't have to. And so the, the flip flop there is we went from 80%. Building all their own tools to now 90% of our clients white label, you know, our, our software, and use our prebuilt tools.

[00:14:43] And that was a major reason why we were able to go from a six month process when we onboarded the first batch of customers to now we're averaging a nine day integration. For software companies to come get integrated into, into Tilled

[00:14:58] Omer: Was that the main pushback with that first version of the product?

[00:15:01] That's just, they, they just were like, you know, the white label thing is like really important. It's kind of a…

[00:15:07] Caleb: it was the white label and then the quality of the developer documentation. So if you're trying to compete against someone like Stripe, who's essentially the gold standard when it comes to developer tools and developer documentation, you've gotta have a great experience, you know, for, for those developers.

[00:15:22] And so the, the two things, you know, that we focused on in that kind of year, you know, after the initial launch was really revamping the developer tools, the developer experience. You gotta have a dark mode. You know, in your, in your dev docs as, as silly as it sounds, does make a difference. And then adding in the, the support for white label.

[00:15:38] And I think those two things were absolutely, you know, critical for us, you know, making that transition towards product market fit.

[00:15:46] Omer: Yeah, I remember building a product and using an API of a, a new API from a company who I won't name, but I thought they were a kind of a fairly large company, but the number of times, like I would go in the documentation and just things just weren't there.

[00:16:02] And you know, I'd have to kind of ask, how do I do this? And they're like, oh yeah, we'll update the documentation. And, and the number of times like there would be bugs where things would stop working. And after like. Days of troubleshooting myself, I'd get in touch with them and they'd say, oh yeah, yeah, there's a problem with the API.

[00:16:18] We need to fix something. And I was like, am I the only guy who's using this? Like..

[00:16:23] Caleb: That's not the feeling you want. Yeah. Yeah. For us, the way that we approached that was we always had scalability in the back of our mind. We knew that, you know, as soon as we got, you know, the product and the, the ICP, right?

[00:16:34] Like this thing was really going to start to scale. And so the, the two ways you could attack a problem like that is every time a problem comes up. Okay, great. Well, let's get people on it. And, you know, throwing people at the problem, for us it was how do we, you know, automate this and improve the documentation itself so we never get that question again.

[00:16:50] And so every single time we got any question from any developer on the platform, we would create a resource so that we wouldn't get, you know, that question again. And so at this point it's, you know, we've had, you know, hundreds of different, you know, developers that have gone through, you know, that experience and they've asked those, you know, bizarre edge case questions that are no longer bizarre.

[00:17:08] Educates questions they're dealt with, you know, pretty straightforward and, and standard, you know, in the documentation. And, and that creates just a substantially better experience for that, you know, next cohort of developers, you know, going through that integration.

[00:17:21] Omer: Let's talk about how you acquired customers and, and getting to that first million in ARR specifically.

[00:17:30] Before we started recording you, you told me a large part of the growth. Came from your personal LinkedIn profile, which was driving, you know, inbound interest leads even investor interest and, and a whole bunch of goodness happening. And, you know, given your background in the industry for, for many years, like the question I asked you was like, oh, so you, you, you must have been building.

[00:18:01] This LinkedIn presence for like a few years before you, you found it till then you were like, no, I wasn't doing anything on LinkedIn and this was like 2020 and I had like less than 500 followers at the time and I was like, okay, that's probably closer to. 90% of people listening to this are like, I'm probably in that situation.

[00:18:24] Right? So it was like, okay, great. Let's, let's unpack this and, and let's just figure out like, what, what did you start doing on LinkedIn that helped you generate, you know, all of these, these kind of good things happening for the business in the inbound leads?

[00:18:38] Caleb: Yeah. So a, a crazy stat that, that I learned about LinkedIn is that only 1%.

[00:18:43] Of the like active registered users on LinkedIn post on a regular basis. And so you're absolutely right that the majority of people are, are in that bucket of, well, I don't post, you know, that often. I, I don't have, you know, that many followers may, maybe they have their most recent company, you know, updated on their, their LinkedIn and that's really where, you know, I started.

[00:19:01] And so for me this was late 2020. You know, getting through the, the Covid period where for us, the original plan for, for going to market with Tilled was outbound. So we were gonna, we were gonna be reaching out, going outbound to, to customers. We're gonna be going to trade shows. I was gonna be traveling around, you know, meeting with folks that, that I knew in my network and, early days of Covid, that was a horrible plan. There, there were no trade shows. There was no travel, nobody wanted to meet, you know, in person. And so I'm thinking, well, okay, how do we get, you know, start building up a brand and start building up, you know, interest in the, in the platform. And so for me, it started very small.

[00:19:34] It started with me just commenting on other people's post on LinkedIn and then resharing other people's content. And then the, the transition for me really starting to, to post was actually me bringing on a ghost writer. So one of the things that I knew about myself was I'm not gonna sit down and go write, you know, a thousand word blog.

[00:19:51] That's not, that's not realistic, you know, for, for me. But what I am happy to do is go hop on the phone for 20 or 30 minutes and share my expertise you know, with someone that can translate, you know, all of my thoughts into a coherent story and put all of that on paper. And so. Hired a ghost writer, and this was probably seven or eight months before we went live with the, the product.

[00:20:11] We started doing these weekly interviews, and so we built up this huge base of content so that when we were actually ready to launch the, the platform, I had more content than I needed for the, you know, the first year in business. And so I started getting more comfortable, you know, sharing those blogs and sharing the journey of building out.

[00:20:29] The, the business and the, the real point of inflection for me and the growth, you know, of that presence on LinkedIn was when I started to share like, my personal journey, the personal struggles, you know, of being an entrepreneur where no one wants to be sold to all the time. Like if I just post seven days a week about how awesome Tilled is and the new features and the new functionality, you know, that we built, like there's a limit to the amount of people that really care to see that, you know, day in and day out.

[00:20:54] You know, and their feed. But when I started sharing like, hey, you know, had a, had a tough day at the office or you know, hey, I actually missed, you know, this meeting to go to, you know, my, my daughter's you know, music recital or, you know, whatever. It was like that's what started to resonate you know, with, with more folks.

[00:21:08] And I think built more of a personal connection, you know, with a lot of people that I've since now met in real life or our customers or our partners or investors, you know, until, because they got to know not just about till, but about me. Caleb, the, the founder.

[00:21:23] Omer: How, how did you find this, this ghost writer and kind of give us a sense of the type of content that was getting created.

[00:21:30] So if someone's listening to this and saying. Great. I'd love to go down that path. What, what, what can they learn from you? And alternatively, if someone's like, man, I don't, I don't, it sounds expensive. I don't know if I have a budget to start paying for a ghostwriter. I think I could take a crack at this myself.

[00:21:45] Right. So what, what, what kind of advice would you give them to, so at least get started small with LinkedIn and, and start to build a little bit of momentum.

[00:21:54] Caleb: So how I found Megan was actually, I read an article that I loved and at the bottom of the article, the guy was like, I can't actually take credit for writing this article.

[00:22:03] This was written you know, by this woman Megan. And so I was like, oh, great, well, I should reach out, you know, to, to Megan. And so I just kind of happenstance, you know, liked her, her writing style and stumbled, you know, upon her. In terms of, you know, the, the budget for something like this. I mean, I think we were paying like maybe a couple hundred bucks, you know, a, a blog.

[00:22:21] And so it wasn't a tremendous, you know, investment. Maybe we were spending, you know, 800 bucks a month, you know, or something, you know, like that. And so she would put together, I. The, the blog and then, you know, two or three pieces of LinkedIn content, you know, that, that I could you know, post out.

[00:22:36] Certainly if you wanna attempt, you know, doing that yourself you can, I'll refer back to, to my Dwayne the Rock Johnson quote about consistency. You know, if you're not really enjoying it, it's really difficult. To, to be consistent. And the reality is it takes a very long time to build up, you know, a, a personal brand and an audience on LinkedIn.

[00:22:54] You're not gonna go from, you know, 300 followers to 10,000 followers in a month. That's just not, you know how that's gonna go. It's probably gonna take you two years. To do that. But once you do it, you know, the, the amount of value, you know, that you can ascribe to it is, is unbelievable. I mean, I, I can point to investors that have found us on LinkedIn, employees that have found us on LinkedIn Partners, customers I mean, it, it just helps.

[00:23:16] I. Drive the business. And one of the things that, that I always preach to folks, whether they're the founder or an executive or you know, an employee at the business, that brand that you build up for yourself is a personal asset that's not a company asset. And so inevitably, whenever, you know, I go to, you know, the next business, you know, beyond tilled.

[00:23:35] I will still have, you know, that that asset that I will, you know, bring with me. And I think that's something that you just have to look at it, you know, as a, as a long term investment. It's not a, it's not a short term, you know, hey, we're gonna, you know, put out this one viral post and all of a sudden the business is gonna get to, you know, 10 million ARR.

[00:23:52] That's not, that's not how, you know, building an audience online works.

[00:23:56] Omer: So you mentioned blog posts. So were you publishing like long form articles on your website.

[00:24:04] Caleb: Correct. And then sharing the link on LinkedIn driving people to our website, which was then getting them to consume other content, read about the business, and then they would come inbound and fill out, you know, the HubSpot form on the website and it, it drove.

[00:24:17] I mean, first year it was 95% of our lead flow was us, you know, converting folks from reading stuff about us, you know, on LinkedIn, driving them to the website. And then either they're DMing me on LinkedIn or filling out the, the form on the website.

[00:24:32] Omer: Right. And before that, you, me, you mentioned this kind of inflection point when you started writing more about your personal side.

[00:24:39] As well. What, what drove you to do that? Like what was happening? Like did you feel like, you know, yeah, it's kind of getting some attention, but it feels like there could be more happening and, and like why did you decide being personal was the way to, to go?

[00:24:54] Caleb: Yeah, I think for me it got to a point where I felt like all I was doing was trying to sell you know, folks about tiled on, on LinkedIn, and it just didn't feel authentic.

[00:25:04] That's not, that's, that's not who I am. Like a, a big part of, you know, me is my, my kids, me, me, golfing, the things I do, you know, outside of work. And so I felt like for me it was really just about trying to be, you know, authentic and, and true to myself and. The reality was it was reinforced by the engagement, you know, that I was getting.

[00:25:24] And to be totally honest, we were getting more leads coming in, you know, once I made, you know, that transition. And I honestly think it's because it made, you know, me more approachable, where people felt like they knew, you know, me as a, as a person and. A lot of times it would be founders reaching out to me, just wanting advice.

[00:25:42] Like, Hey, you know, we're going out to raise our seed round. I see that you just, you know, closed your seed round. Would you be willing to connect? And so there were a lot of conversations with folks that became customers, you know, maybe 6, 12, 18 months, you know, later that started with them just wanting advice on, you know, a pitch deck or you know, Hey, would you be willing to listen?

[00:26:01] You know, to the pitch. I've got a big investor meeting tomorrow and would you be willing to give me notes? And, you know, I was happy to, to do it and just pay it forward, you know, to to other founders.

[00:26:11] Omer: How did you make sure that the content was getting seen by, your prospective customers? I think the problem that many people have when they're starting out is it's like, okay, I got like a couple of hundred connections or whatever on LinkedIn.

[00:26:25] I'm gonna post and probably like five of them will see this thing and they're not my customers, but how do I, how do I reach, you know, the people who. Who could be customers who could find this content useful. Like there's, there's always this kind of gap between, you know, getting to this. So did you have that challenge as well?

[00:26:47] Caleb: Absolutely. I mean, I think, I'll, I'll say three things on this thing. Thing One is the reality is in the early days you are kind of shouting into a black hole. And a lot of those early posts aren't gonna get seen by, by many people. And that, that's just kinda the practical reality, and you have to be okay with that.

[00:27:01] But in terms of how to combat it. I think two like practical you know, tactical strategies thing, one would be finding relevant hashtags that, that make sense, that people, you know, that are your ICP are, are following. And those tend to be, you know, much more smaller targeted groups. So if I'm doing, you know, hashtag payments, there might be 8,000 people, you know, that are following that hashtag.

[00:27:21] But they're prime, you know, ICP, you know, clients for, for us. And then thing two is actually going and proactively connecting with folks that are in that ICPI. And so I would spend, you know, 20 minutes at night while I am, you know, eating popcorn, watching tv, you know, just going and adding like, Hey, here's the 10 customers that we would love to have, you know, on the platform.

[00:27:44] Let me go add the, the CEO, the, the head of payments. You know, if they have a finance guy, I'll, I'll add them. If they have a revenue guy, I'll, I'll add him and go add a couple of, you know, folks you know, from the, the target clients in my network and. What I didn't do is then immediately send them a spam, you know, message to their LinkedIn dm.

[00:28:01] I just, I just added 'em as a connection and then they, you know, casually follow along, you know, on the, the journey. And if they want to come inbound to me, great. If not, you know, carry on with your day and hopefully you enjoyed, you know, my, my post about, you know, my kids or golf or Tilled or you know, what, whatever it was that day.

[00:28:17] Omer: You, you mentioned when you started out you were, you know, going and commenting on other people's. Post then you started publishing more of your own content and, and kind of building that. Were you still spending time kind of commenting on other people's posts? You know, you hear a lot of people who, who kind of building LinkedIn audiences always say.

[00:28:38] Yeah, you should publish content and all of this stuff, but you should like, I don't know, sometimes it gets like ridiculous. Like, like some people say, I leave a hundred comments every day, or something like that, which again, doesn't sound particularly authentic, but I guess the, the, the reasoning behind doing something like that makes sense.

[00:28:57] Maybe there's a different way to do it, but were you still doing that sort of stuff?

[00:29:01] Caleb: Absolutely. And I still do today. So, I mean, driving that engagement is absolutely critical. And I think if you take, you know, the, the mindset that you have to give before you can get I think that's a really important you know, piece here where, hey, I'm gonna go interact with the people's content that I like, that I appreciate their content or our, you know, our, our ICPs and kind of give them.

[00:29:22] You know, something there. And then the expectation is, you know, hey, at some point they're, they're more likely to engage and like, or comment, you know, or, or come, you know, inbound you know, based on that. And so it's, it's still, you know, a, a key part of, you know, the activities that I do, even, even at this point today, honestly, I probably spend more time either engaging with comments on my posts or other people's posts than I even do, putting together the posts, you know, themselves at this point.

[00:29:47] Omer: Okay, great. Let, let's, I, I think what you told me earlier was that just what we just talked about with LinkedIn, drove was basically the main growth channel for you and got you close to the first million in ar, not, not completely all the way there by, just by focusing on this one thing and being consistent with it, the other.

[00:30:14] The growth channel was actually. Finding channel partners. Right. Tell, tell us about that. Like if somebody's not familiar with, with that, like what, what, what are we talking about here?

[00:30:25] Caleb: Yeah, so for us, effectively the, these are resellers, and so these are, are primarily what are considered ISO. So independent sales organizations like my first business.

[00:30:35] Or payments consultants. So people from the traditional payments ecosystem that are going out and targeting the same vertical software companies that would be direct, you know, customers at Till, but we're looking for, for a better solution. And for me it was always something that I, I. Generally, you know, felt like would be successful because in all reality, if something like Tilled existed that I could have resold six years ago, I would not have started Tilled.

[00:31:00] And so I would've been, you know, the first customer, you know, reselling you know, something like this if, if it had existed. And so I knew there were other folks, you know, like myself that, that were out there. But the real eye-opening experience for me was going on a podcast. So I went on James Shepherd's podcast just to give him a little shout out.

[00:31:18] And we had. 36 resellers come inbound to us within the first 24 hours of that podcast airing. And I had absolutely no idea that the, the reaction would be, you know, as strong as it was, you know, from that, you know, ISO agent, you know, payments community. But as much as the vertical software companies were seeking a better solution, you better believe you know these, these ISOs.

[00:31:42] We're looking, you know, for a better solution to, to resell. And so we had just immediate interest you know, from, from those, you know, folks and some of those guys that reached out, you know, that first day are still, you know, great partners, you know, for us bringing us deals, you know, even to this day, several years later.

[00:31:58] Omer: So what, what, what's the, what's the kind of the business model there? Is it kinda like an affiliate type of relationship? Are they. Are they getting a commission on, on the kind of the business they bring you?

[00:32:08] Caleb: Yep. They're getting an override. So they're getting, you know, a share of the, the net revenue.

[00:32:11] So every time they bring us, you know, a software partner, they're gonna get, you know, a percentage of the SaaS revenue, plus a percentage of, you know, the, the take rate, like processing, you know, revenue on that business. And a lot of those partners are really helpful. You know, scaling up those, those clients.

[00:32:26] And so they may be assisting with, you know, sales or support or providing, you know, consultation and so they're providing value, you know, to, to those partners. But yeah, they're getting paid, you know, on every, every transaction, you know, that goes through the partners that they bring to Tilled.

[00:32:41] Omer: What, was this something you discovered accidentally after the podcast, or did you go on the podcast to try and reach these type of people?

[00:32:47] Caleb: I would say. It was more of a surprise at the level of interest, but we went on the podcast thinking like, Hey, we're ready to start testing into this channel. And like, Hey, is this a good way to go about getting in front, you know, of these people? And I think the the obvious answer is yes. It was a phenomenal way, you know, to, to get in front of, of that target audience.

[00:33:07] So it was a bit of luck. But we were, you know, we, we were moving in that direction.

[00:33:12] Omer: Great. So I think this is a really interesting channel to explore for a lot of people. Forgive the pun, but the like the idea of being able to. Rather than go directly to find, you know, a hundred customers, to be able to find somebody who's already selling something to those a hundred customers, whether it's consulting or something else, and getting them to be basically, you know, your, your, your sales person, your partner, your reseller, whatever.

[00:33:44] If, if somebody's thinking about doing something like that. Help, help us understand like the mindset of the reseller, right? Like what, what do they need to be hearing from the founder? To make this type of relationship interesting. O obviously like the financials of, of, you know, getting, getting some revenue and, and whatever is, is kind of a, you know, an important part, but I'm, I'm guessing there's a lot more to it than, than just being able to make money from, from this type of relationship.

[00:34:15] Caleb: I would say, at least in our case, and I think this is the case for a lot of these types of relationships, the, the two main drivers are either, you know, revenue, making money. Or the customer experience and the, the holy grails. If you can provide both, if you can incredibly go to them and say, Hey, whatever you're selling today.

[00:34:33] Adding a solution like Tilled or a solution, you know, like you're selling will make you more money and improve the experience for, for your customers at the end of the day. Like that's, that's kind of what they need, you know, to, to hear. And in our case, the, the like closer was that for a lot of these ISOs, they were already trying to sell to the customers that, that we, you know, we're serving.

[00:34:56] But their close rates were abysmal 'cause they were selling terrible technology. And so we were able to go to them incredibly, say, Hey, we close our data, we close 60%. Of qualified software companies that get on a first call with us, sign up with Tilled, and for these ISOs, they're like, yeah, my close rate's probably like 5%.

[00:35:15] Of course I'm gonna go with the guy, you know, closing 60%, you know, of these deals. Maybe we're gonna make a little bit less money on each individual, you know, opportunity. But. You know, you're gonna close infinitely more, you know, of these partnerships than than I am, you know, on my own. And so we were creating more revenue for them.

[00:35:32] It was a better experience. And then ultimately, you know, we were closing more leads you know, for them. And that was enough for, for us to, to really take a pretty dominant position in that channel. And still to this day, we're one of the few companies in our segment of the market leveraging this channel, which blows my mind every day that, that more people aren't doing this.

[00:35:51] Omer: Great. So, so being able to pitch them on the, the revenue, improve customer experience and demonstrating the high close rate that gets them to say, you know, hell yeah, I'm gonna do this thing with you. What did you have to give them? To ensure they were successful, like training resources, like what generally needs to happen in your experience to, to put these people in a position where they're gonna be successful?

[00:36:24] Caleb: Yeah. I think the more that you can invest in. The right channel partners. And I think that's an important distinction. But the more that you can invest in the right, you know, channel partnership, channel partners, you know, the more that you're gonna get outta that channel. And so we actually put together a full, like video training series.

[00:36:41] So if you were, you know, an agent or an ISO that was trying to go sign up a software company for the first time. We've got, you know, five hours of content that you can go watch to learn about the segment in general, the macro trends, what an ISV is looking for, you know, in evaluating a partner who is tilled, how does the pricing work?

[00:36:59] And so it really outlined, you know, this whole experience for them. The other thing is. Kind of meet them where they are. And so for some of the more sophisticated partners that we had, great. Here's the contract. Let us know when the opportunities are closed and we'll get 'em implemented. And for other partners where you can tell that they have no experience in this space, why don't you invite us to that first call with the, you know, the, the prospect.

[00:37:21] And so we would kind of bring them along on the journey. And so, hey, we will ride shotgun on the first two or three opportunities until you're comfortable. You know, doing this pitch, you know, you're yourself and then now, hey, you're, you're off to the races, you know, selling. And so I think making sure they've got, you know, the proper collateral and, and training available and then meeting them, you know, where they are just realistically in their knowledge base, I think are, are two critical components.

[00:37:45] Omer: One other thing I wanna just dive into a little bit before we, we wrap up. You told me earlier that getting to concept market fit was, was very fast for you, but getting to product market fit was much tougher and, and more of a painful journey. And part of that was because you had a lot of interest and you, you said, you know, there was just like a lot of time wasted on the wrong.

[00:38:12] Types of customers, and I think any founder who is in that place where they're trying to get to the first million in a RR has probably experienced that, where they're just like getting different types of customers. They're not really sure who their ICP is. How did, how did you figure out your ICP?

[00:38:35] Caleb: Yeah, I think for, for us it started with being willing to admit that what we were doing wasn't working.

[00:38:42] Which I think from the outside looking in was a difficult thing, you know, to acknowledge because we were growing, you know, very rapidly. We were having a lot of success, you know, raising capital, and so the business was scaling. I think it was like almost in spite of ourselves. And so for us it started with, you know, having that, that realization.

[00:39:01] But I think it was really a data-driven decision. So let's go look at, you know, these first 50 clients on the platform. Well, you know, these, you know, 15 or 20 are really having success and the rest of these honestly aren't. And for us it was really getting granular, looking at the data and looking at the unit economics and saying, Hey.

[00:39:18] If we actually fired these 20 customers, we would actually have the bandwidth and the resources to focus on, you know, these other 20 that are really scaling and really having success in the business. And I think it was a pretty scary moment, you know, for, for our team. But I had just absolute conviction and confidence that we had.

[00:39:38] To make this decision if we wanted to, you know, reach the, the level of scale that I knew the business, you know, was, was capable of. And so it was just having the, the kind of fortitude to make that bet, the business decision to say, Hey, if we narrow in, you know, our focus and find more of the customers that look like the guys that are having success on the platform, you know, I think will grow faster.

[00:40:01] And, you know, we've grown. Close to 500% year over year. You know, and so that decision was the driver that unlocked that higher level of, you know, growth and, and scale in the business.

[00:40:13] Omer: Yeah. Yeah. No, I think that it's, you're right. It's a really tough thing to do, especially when, you know, any revenue is, is, very welcome. And, and to turn it away is like, is really hard.

[00:40:26] Caleb: It, it, it feels very strange as a founder, especially like early days like, hey, we're, you know, one, one 2 million in revenue. Like, are we really saying no, you know, to, to customers, you know, that want to, to do business with us? And I think it was a lot of, you know, internal dialogue and a lot of struggle.

[00:40:44] To get to that point, but as soon as, you know, we, we made that decision, you gotta just commit, you know, and, and see it through. And that's, that's what we did. And we, we came out the other side, you know, fe feeling like we made the right call.

[00:40:56] Omer: So, so when you, when you made that decision, you pulled the trigger, how, how, kind of, what was that transition like?

[00:41:05] Did, did you, did you feel like. Fairly quickly you started to see the traction or was this this kind of weird period where you were like, did we make the wrong decision here?

[00:41:17] Caleb: So for us it was, it was about a 90 day process to go through this. Like, Hey, let's define who these customers are. Here's the customers we're gonna fire, how are we actually going to implement, you know, this, this strategy shift.

[00:41:30] And for us there was probably about 60 days where. There was a lot of like, Hmm, the data doesn't look great. 'cause I mean, effectively we fired, you know, not, not, not half, but a, a good chunk, you know, of our, our customers. And so there was, there was absolutely, you know, this, this dip. And I think what I started to, to realize was looking at some of our pipeline.

[00:41:52] Data we were seeing this massive increase in the revenue potential of like each new customer that was coming in to, to the pipeline. So we were successfully targeting those higher quality, larger, you know, customers in the, in the business. And then it was probably. Like 90 days or so after that shift that we had this first month of like 25% month over month growth and we're like, okay, like this is, this is looking pretty good.

[00:42:17] And then we did it again, and then we did it again, and then we did it again. And it's like, okay, the data is starting to reinforce that, that in fact, you know, was the right decision for, for the business. But there was absolutely this like 60 to 90 day, you know, limbo period where. You're definitely asking yourselves you know, questions and, you know, the team's looking around like, Hey, is this is this strategy, you know, working?

[00:42:38] And, you know, we had the, the, you know, fortitude to, to kind of see that through.

[00:42:43] Omer: Love it. Okay. We, we should wrap up. So let's get onto the lightning round. I'm gonna ask you seven quick fire questions. You ready? Let's do it. Okay. What's one of the best pieces of business advice you've received?

[00:42:56] Caleb: Culture eats strategy for breakfast.

[00:42:59] Omer: What book would you recommend to our audience and why?

[00:43:02] Caleb: Peter Thiel, Zero to One. And if you've read that book, I think that's a pretty self-explanatory answer. I love, love that book.

[00:43:09] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:43:13] Caleb: Perseverance. There's always headwinds and you gotta find a way to persevere through.

[00:43:18] Omer: What's your favorite personal productivity tool or habit?

[00:43:21] Caleb: Listening to music. If I, if I don't have AirPods in Spotify on, in the background, I basically can't get anything done.

[00:43:29] Omer: What's a new or crazy business idea you'd love to pursue if you had the time?

[00:43:33] Caleb: I've really been getting into the idea of what AI can do for, for payments. And so I feel like in the underwriting space there's a lot that that could be done with some AI tools.

[00:43:43] Omer: What's an interesting or fun fact about you that most people dunno?

[00:43:47] Caleb: I. I think most people don't realize that I actually love to play pool, so I have like a billiards table in my living room.

[00:43:54] And every night I hold my 1-year-old and we play pool.

[00:43:59] Omer: Love it. And finally, what's one of your most important passions outside of your work?

[00:44:03] Caleb: Golf. Absolutely love golf.

[00:44:06] Omer: Cool. Thank you so much for joining me, Caleb. It's been a pleasure. Great, great chat. I, you, it was great to unpack the story, but also I think you shared a ton of really useful.

[00:44:15] Lessons that I think for founders who are on their journey will, will walk away from with this with some inspiration, some insight, some ideas of things that they can go and try and that's always a, a successful outcome if we, we achieve that. If people wanna go and check out Tilled, they can go to Tilled, which is tilled.com, and if folks wanna get in touch with you.

[00:44:37] What's the best way for them to do that?

[00:44:39] Caleb: I mean, I'm gonna have to direct 'em to LinkedIn. We, we can't do a, a podcast on LinkedIn and me say Twitter or something like that. So fi find me on LinkedIn. Would love to connect.

[00:44:47] Omer: Great. All right. Thanks so much man. I appreciate it and I wish you and the team the best of success.

[00:44:52] Caleb: Awesome. Thanks for having me on the show today. Appreciate it.

[00:44:54] Omer: Bye. Pleasure. Cheers.