In Episode #167, Nathan speaks with Eran Eyal, the CEO and founder at Springleap, a marketplace of 180K advertising agency experts. Listen as Nathan and Eran talk about the latter’s extensive experiences as an entrepreneur and the valuation of SAAS businesses.
Time Stamped Show Notes:
- 01:00 – Nathan’s introduction to today’s show.
- 01:34 – Eran joins the show.
- 02:20 – Eran describes his time with E-Squared, an apparel and coffee based retail business.
- 03:51 – E-Squared started in 2006 and was sold in 2008.
- 04:34 – The business had two locations and didn’t produce a massive exit. 3-4X in topline revenue.
- 05:31 – Eran describes his second business which relied on crowdsourcing.
- 09:00 – Initially the drag-and-drop crowdsourcing software wasn’t SAAS based. But it quickly switched because clients preferred paying a SAAS model.
- 10:11 – At its peak, the crowdsourcing business had about 37 large customers and several small ones.
- 10:36 – The highest MR (marginal revenue) for the crowdsourcing business was about 250K a month.
- 11:45 – One of Eran’s strengths is building a successful marketplace, a skill that helped him strengthen his drag-and-drop crowdsourcing business.
- 12:29 – Nathan and Eran discuss tying the valuation of a SAAS business to annual recurring revenue.
- 13:37 – Eran gives an example of why a MRR SAAS based business shouldn’t be valuated with only a multiplier.
- 14:35 – 7X to 10X is a good multiplier on ARR (annual recurring revenue) for a SAAS based business being sold, but it hinges on a variety of factors.
- 15:43 – While Nathan believes that anything other than the multiplier is only speculation, Eran believes that the speculation affects valuation significantly.
- 16:01 – Eran explains/defends his stance on speculation’s impact on valuation.
- 18:05 – Eran will be back on the show to talk more about Springleap. No Famous Five for this episode.
3 Key Points:
- The valuation of a SAAS model business may not necessarily be only evaluated on a multiplier. There are a variety of factors that can influence its value.
- It can be prudent to start small as an inexperienced entrepreneur – E-Squared, Eran’s clothing and coffee based retail business was a labor of love and learning.
- By building and integrating a successful marketplace into his crowdsourcing drag-and-drop business, Eran was able to increase its value.
- Growth Geeks – The way Nathan hires growth hackers on a per project basis for things like info graphics, blog posts, and other growth projects
- Edgar – A tool Nathan uses to add pieces of content to a library and automate content distribution on media platforms.
- Springleap – Eran’s business
- @EranEyal – Eran’s twitter
- Clarity – Eran’s Clarity
- firstname.lastname@example.org – Eran’s email
- LinkedIn – Frank’s LinkedIn
- Crunchbase – Springleap, Eran’s current business
Eran Eyal is a serial entrepreneur with three exits under his belt. He’s also a contributor on several advisory boards. He currently works as the president and founder at Springleap, a marketplace for 180,000 advertising agency experts. Eran is the winner of Alley Boost Investor Pitch night, Techstar’s pitch night, The United Nation World Summit Award for Innovation, and Mentor Camp Global Finals.
- Show Notes provided by Mallard Creatives