MINDBODY President Josh McCarter on Going From Losing $350,000 per Month to Running a $2 Billion Juggernaut
Mark Moses: Well, I'd like you to meet my good friend, longtime friend, Josh McCarter. Josh and I have had the privilege of being in forum together for 12 or maybe 13 years.
Josh McCarter: Yep.
Mark Moses: Josh is an amazing guy. I have some of my forum mates, or I think I got one of my forum mates, still at this table here. Terry Adams. I remember one December-
Josh McCarter: At Terry's house.
Mark Moses: ... having events at Terry's home, and Josh has got truly this little, little struggling business and we're all saying, "Dude, I think you better start finding something else to do because, I don't think you're going to make it. We don't think," oh, there's another forum mate right here. "You're not going to make it." And, what you have done, it's not everybody in the room here that's had a nine figure exit last year. And, today Josh, it was just announced a couple of days ago, is the president of the firm that acquired MINDBODY, which some of you know, at a evaluation of over $2 billion. Josh McCarter.
Josh McCarter: Thank you, Mark. Appreciate it.
Mark Moses: Please-
Josh McCarter: Thank you.
CEO Coaching International
Mark Moses: ... have a seat. Let's see if I can take control of the interview this time. Maybe it's the chair.
Josh McCarter: I heard about last night. I'm really disappointed I didn't see that though.
Mark Moses: I'm sure you would have enjoyed it.
Josh McCarter: Is it videoed?
Mark Moses: Yeah, we do have it on video-
Josh McCarter: Perfect. Perfect.
Mark Moses: ... I'm happy to say. So Josh, let's go back to the day at Terry's home. How'd you get yourself into that place, and what was going through your mind when you felt, or at least your encouraging, inspiring forum felt, we're at the end.
Josh McCarter: Yeah. So, I'll give it a little context too because I think that might be helpful. So, this was a business that I spun out of a company that I was on the board of. A software business, and we were trying to figure out what to do with it. And, we thought that we would be able to either spin it out and sell it or spin it out and raise capital. And, after we spun it out I was dedicated to try to figure it out. And, pretty quickly, looking at the customer base, looking at the financials, looking at the kind of checks that we were having to write, it got pretty dismal.
Josh McCarter: And so, that's what we started talking about with saying that, man, I'm not sure that there's, within the customer segment that we're going after, that there's actually a there there, and we have to start thinking about pivoting. We have to start thinking about how to raise capital for this. And, this was in 2010 and it was a SasS business, and most people could barely spell SaaS at that point, much less understand the funding environment and the metrics. And, it was also based in New York City and I was living in California.
Josh McCarter: And so, trying to figure out how to piece all of that together, find investors that understood spin outs, that understood SaaS at that point, and that were willing to take a gamble on a startup in New York City. It wasn't the type of environment than it is now where New York's the number two funding area for SaaS businesses and fintech.
Mark Moses: We're forum mates here, so let's just talk like we're in forum.
Josh McCarter: What pressure.
Mark Moses: So, what were revenues at the time?
Josh McCarter: Probably $700,000.
Page 2 of 15 CEO Coaching International
Mark Moses: 700. What were you doing-
Josh McCarter: With 30 people burning about 350,000 a month.
Mark Moses: What were you doing in YPO?
Josh McCarter: Well before, my prior company was $200 million in revenues so a little different, and profitable.
Mark Moses: Wow.
Josh McCarter: Yeah. So yeah, I was-
Mark Moses: So, what'd you do next?
Josh McCarter: So, basically, what I did was we started actually coming up with a strategic plan for the business. It never had one before. We started to having to look at the market dynamics, where were things going, and also looking at not just our particular vertical, but the analogies that were happening in other verticals. So, this was very much focused on health and wellness, spas and salons.
Josh McCarter: And, the idea was, man, if we could become a SaaS platform for these businesses, help them run their operations better, and then really help them drive to online booking. OpenTable at the time was really coming on strong and we figured, hey, if we can enable businesses to run their operations, but then connect with consumers where they are, mobile devices, on the web, we thought that we would have a compelling proposition.
Josh McCarter: And so, it required us to completely pivot from the space that was originally focused on when it was part of the business I spun it out of, which was in hospitality. And so, we got out of the hospitality business and then focused on a small and medium businesses, primarily in the US.
Mark Moses: So, you mentioned OpenTable and the name of your firm was booker.com, and just give us one sentence, or just short overview what Booker did.
Josh McCarter: Yeah. So, I think of it as business management, or ERP basically, for health and wellness businesses. So, we did everything that they needed to power their internal operations. So, staff scheduling, online bookings, CRM, point of sale, all of the reporting that went around that. And then, we added payments components to the business. That actually ended up becoming a material part of our revenue.
Mark Moses: And, tell us, who are your clients?
Josh McCarter: Clients were mostly SMB's, small and medium businesses. Some of our larger clients that some of you might know would be like a Drybar. So, that would be a
Page 3 of 15 CEO Coaching International
larger example. But, our average, when we looked at logo to location was about 1.2, 1.3. So, most of them were small single unit businesses probably doing $250-500,000 a shop. And, our revenue off of those businesses was around $2,000 a year. So, you have to add a lot of those up to get to material revenue, and you have to retain them and a lot of them go out of business. And so, that's also a rub with that market.
Mark Moses: Well, speaking of going out of business, you got this business that's doing a whopping 700,000 in revenue. That's per year, right?
Josh McCarter: Yes. That was per year. That was not per month.
Mark Moses: And, you're losing $350,000-
Josh McCarter: A month.
Mark Moses: A month.
Josh McCarter: Yeah. That's upside down.
Mark Moses: Yeah. I get that. So, how soon was it before you're going to run out of money and what did you do?
Josh McCarter: So, we ran out of money every month. We were writing checks into the business. I wasn't taking a salary, and we were trying to figure out how to reposition the business for scale. So, we did the strategy plan and an interesting thing happened. Sometimes, it's better off to be lucky than good. And, we had Groupon approach us to buy the company. And, what happened when that started was everybody started getting a reinvigoration of faith that there was actually an opportunity for this business. And, despite the fact they tried to buy us with their stock at a $16 billion valuation, we said no to that, thankfully.
Josh McCarter: It introduced us to LivingSocial, and they were the number one competitor to Groupon at the time. Steve Case happened to be one of the original investors in LivingSocial. And so, he was involved in a couple of the meetings. And, he pulled me aside one time and he said, "Hey, if you don't sell to Groupon," one of his partners, ironically, was on Groupon's board. So, they had kind of visibility on what was happening on both sides. He said, "Hey, we'd be interested in leading your first round."
Josh McCarter: And so, here's a business now that was probably up to now $1 million in ARR, but still losing a lot of money. And basically, they said, "Look, we've seen this through LivingSocial, a lot of these businesses need an operating system. We see how they need to be able to be connected with the web for online booking. And, we think there's a large play in the overall services category. It's one of the largest categories at LivingSocial and at Groupon. And, we'd like to lead you round." So, they ended up helping us craft a structure that made sense for
Page 4 of 15 CEO Coaching International
everybody. And, we closed a $15 million series A in November of the year after I got involved.
Mark Moses: This is the same Steve Case from AOL?
Josh McCarter: AOL.
Mark Moses: America Online.
Josh McCarter: Yep.
Mark Moses: Wow. What was it like to get to know him?
Josh McCarter: He was a great guy, very humble. A guy that when I had one of my turmoils, was I had to fire my co-founder about a year and a half into the business, and Steve called me up on a Saturday and spent half an hour on the phone talking with me about some of his trials and tribulations and difficulties that he went through with the Time Warner AOL deal. And so I thought, man, when you have somebody at his level that's willing to reach out when you're going through tough times, it's pretty remarkable.
Mark Moses: So then, what happened? You got 15 million bucks.
Josh McCarter: Yep. So, we were off to the races.
Mark Moses: How long is that money going to last?
Josh McCarter: I mean, at the growth rate, it was kind of a strange dynamic because as investors were coming in, it was all about, how do you grow? It wasn't about, what's your EBITDA, and what's your path to profitability? It was, if you can just maintain your growth rates. That's what everybody was focusing on, which was very different from my last business where we were focused 100% on monthly EBITDA. And so, with this, we started building it out. We closed 2011 with a little over a million, and then the following year we went to three, then we went to eight, and then we went to 15. And so, the business was growing pretty nicely from that standpoint.
Josh McCarter: But, we were spending a ton of money. We had to do a second round of funding. We did a series B that was led by Bain. And when they came in, they said, "Man, you guys have to spend even more money than what you're spending." And so, we took our burn up to about a million and a half a month, which was totally uncomfortable for me because I just felt like, man, this doesn't make sense. But, this was now at the time, 2013, 2014, where SaaS businesses were starting to be understood better and the fabled LTV to CAC ratio, if that plays out right, then the thesis is you just keep throwing money at it as long as you can grow and retain those customers. And, fortunately, we were able to do that.
Page 5 of 15 CEO Coaching International
Mark Moses: How much did you raise from Bain?
Josh McCarter: I think it was about 20 million.
Mark Moses: Also, the Boston bombing impacted your funding.
Josh McCarter: I can't believe you remember that.
Mark Moses: I'm in your forum.
Josh McCarter: Man, that was a tough day. So, yeah. So, we were getting low on cash. We had Bain lined up, they were leading the round. We had all of our existing investors coming in, and we see on the news, we had TV's all around the office, and we see the Boston bombing on the news. And, the first thing is, is I get a phone call from a friend whose wife was running in the Boston Marathon and had literally just passed through the finish line a few minutes before, and they were sitting over at the park when the bombing went off. So, that was the first alert that I got.
Josh McCarter: The second alert that I got was from the lead partner at Bain, and he called up and he said, "Man, we cannot hit the wire today because we're being evacuated." And so, that was definitely not something you typically expect to encounter during a closing. We had people flying in to celebrate, and some of the other partners from Bain's New York office were literally at our office for a happy hour and this ends up happening. Obviously, it was a terrible event for the folks in Boston and at that marathon. And for us, it was impactful, but we got everybody to calm down. My existing investors were freaking out about it because of how tight the cash was. And anyway, we ended up closing the following week.
Mark Moses: Because it took a whole other week to close.
Josh McCarter: Yep.
Mark Moses: Do you almost run out of money during that period of time?
Josh McCarter: No. I mean, we had a couple of hundred thousand dollars of cushion, but we didn't have enough for the next payroll.
Mark Moses: And, how much were you burning then?
Josh McCarter: We were about 750, 800 a month.
Mark Moses: Wow.
Josh McCarter: Yeah. So, it was a challenging time.
Page 6 of 15 CEO Coaching International
Mark Moses: So, I know that you raised more money down the road. Take the story to the next round. You're how much in revenue right now, at this point?
Josh McCarter: At that point, we're probably around 12 million.
Mark Moses: 12 million revenue.
Josh McCarter: Something like that.
Mark Moses: And, you've raised how much so far?
Josh McCarter: It was 15, and then the 20. And, then we did a series C that was a 35. And, in between those two, this was kind of an interesting dynamic, was we had a buyout offer from GoDaddy to sell the business. And, my board, even though we all thought that it made sense, my board basically said, "We don't think that the number's right." And, it was a big number. It was a 10x multiple on where we were. And so, we said, "Man, that's a big number." And they said, "Yeah, but with your growth rate, you're going to be there in a year. And, if you go out to raise your next round of funding, you're going to be at a number that's higher than that." And so, we ended up passing on that deal. And, I think that, in retrospect, frankly it was a mistake, especially with GoDaddy's IPO and everything else that happened. They've been really successful since those days.
Josh McCarter: And so, what we ended up doing was, I mentioned that part of our business was payments, and so we ended up hooking up with First Data. And, the vision there was First Data's one of the largest merchant processors in the country. They have joint ventures with Bank of America and Wells Fargo. They're signing on literally tens of thousands of small businesses every month, a good percentage of those are in health and wellness. And so, the thesis was, we can start funneling some of those businesses over to Booker. It'll fit with the vertical SaaS solution. First Data picks up the the payments revenue and then they kind of push us through all of their sales and marketing channels.
Josh McCarter: And so, that was the concept, all the way up, sponsorship from the CEO. They wrote a $25 million check into the business. And, a lot of that had to go towards enabling them to understand how to sell SaaS, how to integrate with their systems, how to train their sales teams, trade shows, conferences, everything that we had to do over the course of a couple of years to get that going. And, I think the point that you might be driving towards is that we bet a ton on this. Frankly, almost our entire round, we bet on making that happen.
Josh McCarter: And, the CEO came to me and he said, "We're going to be driving so much business to your company that you guys should just give us some extra shares." And I said, "Well, I'm not going to give you extra shares, but you can earn extra shares. And so, why don't we structure it so that you can get some warrants in the business." And, we had some different models that we worked with his team and he said, "Yeah. Well, let's do it on incremental revenue that we drive
Page 7 of 15 CEO Coaching International
to you. You guys are valued off of revenue. So, let's focus on incremental revenue."
Josh McCarter: And, the minimum earn-in was $20 million of incremental revenue over three years. And he said, "Oh man, we're going to do that in the first year. So, give me a stretch goal. Give me some way that I can get an extra 10% of the company." So, we put that number at 100 million. And he said, "I think that we're going to get it. All of our models are saying that we'll get there." So, I was pretty excited thinking, man, if we could add $100 million of revenue.
Josh McCarter: And, fast forward to, as we start getting further down the path with them, the net revenue they drove to us over three years was under $1 million. And so, that takes a huge amount of wind out of your sails and a hell of a lot of cash out of your bank account when you're trying to build those types of partnerships. And so, when that happened, they said, "Hey, we're going to do another round of investment. We realize that the execution... you guys have executed, we haven't executed. Let's do another 15, 20 million round to have you really lead our vertical SaaS strategy. So, we want you guys to come in, help us figure out how to lead this vertical SaaS strategy, and we'll continue funding the business."
Josh McCarter: So, we went down the path of doing that. And then, I remember two days before I was going on a family trip to Europe, it always seems like shit hits the fan when you're going on a family trip. And, I get a call from the CFO and he says, "Hey, we've got a huge deal that's closing next week." They did a $750 million acquisition. And he said, "We're going to have to punt on this for six months." And so, my board came back and basically said, "Look, if they're punting for six months, there's no way that we can sustain the investment that we're making right now. We're burning a million and a half, probably." 600 of that was on the First Date of partnership because we had to build out all of this infrastructure and go to market support. "And so, we need you to give us a plan for how do you take out 50% of your expense in the next 30 days?"
Josh McCarter: And so, that was not a great moment. It was not a great vacation. And so, we ended up, working with my CFO and a couple of other leaders of the company, looking at how do we reduce that. And, it ended up being about a 35% headcount reduction plan. And then, some other areas, where we cut on office expense and travel and different things. And so, anyway, we had to go and execute that on one day across three different offices. Let a good percentage of the team that had helped us build the business go. And, that's never any fun when you have to go through it.
Josh McCarter: But, the reality was that it was the right decision, and it put us on a much better path that ultimately, had we not done that and not taken kind of control of our own destiny, we wouldn't have been able to sell the company to MINDBODY. Because, as a public company, they couldn't have absorbed a business that was losing a million and a half dollars a month. And so, it was the right decision.
Page 8 of 15 CEO Coaching International
Unfortunately we got there not the best way, but ultimately it was the right decision.
Mark Moses: So, you had a meaningful exit, a big exit. Tell us a little bit about the outcome. What happened, and what was the hardest part about getting from moving the business towards sale and actually getting to execution and getting paid?
Josh McCarter: Yeah. So, we had a couple of fits and starts. MINDBODY is a company that was the most logical buyer for the business. And, I know the CEO well. He's a YPO guy that a lot of us in the room know. And, he and I had developed a really great relationship over the years and we took a couple of runs at selling the company to them. And, it just frankly didn't work. There were various reasons why that it didn't come together over time. And so, my board came back and they said, "Look, we really think we're going to have to go back out for a fundraise in a year. We think the market conditions aren't going to be great. We probably have a flat round. And, if we do that, we'd rather just look at trying to sell the company now."
Josh McCarter: And so, we had already approached First Data. There were a lot of other payments companies that were interested in vertical SaaS. We decided to bring on a banker and it was Raymond James. They have a good practice in fintech. And so, we worked with them to go look at the different options. And, the interesting thing was that developing the list, it turned out that the most likely buyers were all people that I'd been developing relationships with over the last three to five years.
Josh McCarter: And so, I think that's one of the big takeaways for me was bankers are great to help run a process, create a sense of urgency, and so forth. But, as you drive towards an exit, it's going to be your personal relationships and your network that really drive an optimal outcome. And, if you know kind of the landscape that you're that you're working with, you can navigate that pretty well.
So, anyways. So, the process actually ended up being really quick. Once we decided we were going to go, we launched at a trade show in October. We had initial bids right before Christmas. We had final bids at the beginning of February. We selected MINDBODY. We went into exclusivity in the beginning of March, and we closed 30 days later. $150 million transaction, we closed in 30 days.
Mark Moses: Amazing. Yeah, it's amazing from... your whole forum has such high regard for you. I'm sure everybody here can tell, you're a pretty nice guy and you're a humble guy, and I bet there wasn't one of us that thought you were going to be able to pull this thing together.
Josh McCarter: I heard that in many forum meetings by the way. So, this isn't new news to me.
Page 9 of 15 CEO Coaching International
Mark Moses: It's amazing. So, many of us here in the room get faced with that spot where they begin to question their own belief. Do I think I can do this? Can I pull this out? Do I have the courage, or even the fortitude, do I want to do this anymore? What moved you to carry on when so many thought you might not make it?
Josh McCarter: Yeah. I think it's a good question. I mean, I think the first part is you've got to have faith that there's an outcome you can drive towards, and maybe that outcome wasn't going to be as good as what we achieved. But, I felt a huge sense of responsibility to figure it out and to just work at it until I landed the plane somewhere. And, that was a responsibility to my investors. It was a responsibility to my team, to my family who moved cross country from Orange County to New York. And, honestly, it was just kind of like sheer will and determination to just figure it out because I knew that there was value in the business. I just had to figure out how to unlock the value and how to find somebody that saw the same level of value in the business that I did.
Josh McCarter: But, most of our other term sheets, we had several other term sheets, they were south of the number that we sold to MINDBODY for. We only had one other term sheet that was in the same zip code, but there was a lot of structure to it. And, I think that that's one of the things that I also learned in the sale process is, it's not just all about the headline number that you get. It's about the structure that you obtain. And, we did an all cash deal, which in hindsight was great because, later subsequent to joining MINDBODY, we ended up taking MINDBODY private in a close to a $2 billion transaction with Vista. And, that was, when we sold, our MINDBODY share price was 42 bucks, and we took it private at 36. So, had we taken stock, we would have had a pretty significant hit on the value of that transaction.
Mark Moses: When President Bush was here yesterday, he spent a lot of time talking about family, his daughters. Like him, you have two daughters. You have a solid marriage to Tracy. You're family man. You commute across the country. Then, you move your family to New York. What role did your family play in your success?
Josh McCarter: Oh, a huge role. I mean, so first of all, in thinking about this and listening a little bit to Ron's presentation as well, I think overall your family is a huge part of who you become and how you navigate life. And so, on on my mom's side, they were a bunch of Greek immigrants that were all entrepreneurs. They were hawking everything, cars and planes and boats and restaurants and everything else. And, my dad's side of the family was more in the government. And, my dad passed away when I was 12. And so, I had to learn to be super independent and rely, largely, on my mom and on myself for kind of making my way in life.
Josh McCarter: And then, I ended up marrying Tracy who is a great partner for me and a good friend, all the way going back to high school. And so, she has always been there to support kind of anything that I thought was necessary from a business standpoint. Luckily, I've had good fortune and made some good decisions. I
Page 10 of 15 CEO Coaching International
think if I would've whiffed a couple times there might be a little question. But, she was there to support me along the way.
Josh McCarter: And, the interesting thing with my kids is that they were at an age where they were portable. So, they were still going into junior high, and even one in elementary school, when we went to New York. And, the way that we approached it was we're saying, "Hey guys, life is an adventure and, yeah, living in Orange County is great. And yeah, we're down by the beach, but how cool would it be to live in New York City. Have a totally radically different experience in life and see a different way to live and and different culture and different people." And so, I mean, it was a big pitch job. I'm not going to joke about that.
Mark Moses: I know. Listen, I went to your home in Newport Beach. It was beautiful. I saw your little apartment in New York.
Josh McCarter: It was a big change, man. It was a big change. Yeah. And, one of the things that we did, it was really funny, was we took those giant post-its and put them up around the house. And, we wrote on the top, why I'm pissed about going to New York, and what I'm excited about going to New York. And, the kids for like a month we're going up and writing things down. Something would come up in a conversation and they'd go write it down. And, pretty soon, all of a sudden the list for why they were excited got a lot longer than the list of about why they were upset. And so, that actually really worked well.
Josh McCarter: And, in the meantime, we also had pulled them out of school. And, I think you remember these days, I was commuting back and forth. And so, we had a teacher in Orange County teaching them, homeschooling them, and then we'd fly to New York, we'd fly to Europe. And so, all of a sudden they started kind of seeing the world as a larger kind of opportunity for them. And so, when we made the move, yeah, they were a little bit upset, but they jumped right in, and now they think of themselves more as New Yorkers than as Californians.
Mark Moses: You have one of the most special relationships with your mom of any of my really close friends. It's something that's very admirable. Share with us, why that relationship, and how your mom was there for you and you were there for your mom throughout the journey?
Josh McCarter: Yeah. So, it's been really interesting. So, my mom is a free spirit. She was a college professor. In fact, I was showing somebody today a 20 foot mermaid that is dressed up for Cinco de Mayo in front of my mom's house. It gives you a little insight into my mom. She's a little bit out there, but she's amazing. And, I mentioned my dad passed away when I was 12, and she worked triple time to make sure that we had a house, that we were in a decent area. I was the poor kid among my friends, but we lived in La Jolla, and so that was a good place to grow up, good schools. And so, she made a lot of personal sacrifices to be there for me and also really taught me a great work ethic.
Page 11 of 15 CEO Coaching International
Josh McCarter: She also really kind of exposed me to the other side of living, between camping between, my first job, she got me detailing cars at a Volkswagen dealership when I was 12. I was the only white guy there. I was the only guy that didn't speak Spanish. So, I started learning Spanish. And then, my mom, who's a linguist also, helped me learning that. And so, she really exposed me to a lot of things, taught me some really foundational work ethics and habits that have just served me well throughout my life. And now, it's great. She comes in and will take care of my kids. She comes out and stays with my family when I'm traveling. They're just as happy when she's there and I'm not there. It's pretty special.
Mark Moses: If there were two or three things that were the biggest lessons you learned along your journey, because you had quite a career even before you went down this road, what would you say some of the biggest things you learned throughout your entrepreneurial or professional journey?
Josh McCarter: So, one, and Ron hit on this a little bit earlier, I think it's really learning to surround yourself with people that make up for your weaknesses. And, that also presupposes that you're introspective enough to recognize what your weaknesses are. And, I find a lot of times that executives aren't able to do that. I learned a new phrase from my new partners at Vista, which is be a learn it all, not a know it all. And, I thought that was actually pretty interesting because I've experienced a lot of times with executives that always have to be the smartest guys in the room. And, I've seen that kind of crash and burn many times. So, that to me is kind of number one.
Josh McCarter: Number two is, is when you're recruiting, really look for fit first. Because when you don't have people that fit, they don't fit the values, they don't fit the culture, they're going to be a cancer in your business. And, Mark's taught me a lot about that over the years. I've also tried to recruit people that I think are going to be valuable, not this month and next month, but next year and two years, so that they can pull the business along. And, a lot of times people, they're in a crisis, they need somebody to fill that seat. And so, they look for somebody that can do the job that needs to be done today. And, you really, in a high growth business, you've got to be thinking a year, two years down the road, otherwise you're going to have so much churn. And, by the time people get up to speed on the business, you've really lost momentum. So, those are two things. I know we're running short. So, those are-
Mark Moses: It's all right. I control the agenda, today anyway.
Josh McCarter: Perfect.
Mark Moses: Secret Service is now gone.
Josh McCarter: Excellent. Excellent.
Page 12 of 15 CEO Coaching International
Mark Moses: How many people in the room here right now are raising capital, or are going to be raising capital's soon?
Josh McCarter: Wow.
Mark Moses: It's a good number. So, fair number. What might be two or three of the top lessons that you learned about raising capital? What advice might you give to the group here as they raise... you raised it on 700,000 in revenue in-
Josh McCarter: Right.
Mark Moses: Right?
Josh McCarter: Yeah. So, and this is going to sound a little bit ironic but, first of all, try to do it from a position of strength. So, obviously we weren't doing it on our series A from a position of strength. But, when we did our series B we were, and it allowed us to get a lot better terms. So, that's number one. It's interesting. Sometimes, I'll advise companies and they run the whole runway out, and then they've got no cash and they got to go raise money. And so, always be thinking a year ahead on your cash planning cycle.
Josh McCarter: The second thing is the terms matter. And, a lot of times, people focus on the headline number. Oh, I got this pre-money and I'm bringing in this amount. Well, if that was participating preferred stock versus preferred stock, that makes a big difference. If it has dividends, if it doesn't have dividends, are they compounding dividends? All of those things matter in terms of, at the end of the day, when you sell, how much money do you put in your pocket? And so, I very frequently counsel people to take the cleanest term sheet that they can get, even if it's at a lower valuation.
Josh McCarter: The other thing that I learned was you have to really understand the firm and the dynamics of the firm and the partners. So, Mark mentioned Bain. I had Bain's number one SaaS guy invest in our business. He was fantastic. He really schooled me and brought me up to speed on what SaaS is all about and how to run a SaaS business. And then, he decided to leave the firm and they put somebody else on the board from the firm who was good, but not great. And, who also was much more challenging to work with. And so, that board dynamic, when you think about who's going to be on your board, you're married to these people for three to five years at least. And so, having the right dynamic, having the right chemistry, interviewing for fit, that applies as much to your investors as it does to your key executives.
Mark Moses: So, last question. Dude, you're running a company now valued at $2 billion. Wow.
Josh McCarter: Pretty crazy, huh?
Page 13 of 15 CEO Coaching International
Mark Moses: I know you.
Josh McCarter: It's a big lemonade stand.
Mark Moses: You got to be nervous as hell.
Josh McCarter: Yeah. I mean, it's interesting. I mean, some of the stuff that I'm seeing though is that a lot of the things that we did at Booker, that we had to do to streamline the business and really become more efficient, is what we have to do there. And so, I feel on one side kind of optimistic that some of the playbooks that we had to do in the past in my other businesses are going to be applicable to this. So, that's exciting. But, I mean, starting this week I've got 1400 employees in my organization.
Josh McCarter: And, it's interesting working with Vista because they are a growth oriented PE firm. Meaning they're coming in and asking us, "Okay, where can we invest more now? We don't care if we're going to take up your burn by 20, 30, 50 million dollars this year if it means that we can have an exponentially larger return down the road." And so, it's a very different way of thinking for most PE firms. They've told us very directly this is a marriage of convenience. We are going to be together for three to five years. And, it's all about how do we hit escape velocity in that kind of timeframe. So, whatever those big investments are, now let's go make them happen. And so, we're focused on that.
Josh McCarter: The big thing that I'm excited about in our businesses that we are really recognizing that B2B2C opportunity. So we have an app. I was talking with some folks earlier that actually use it. And, we're doing about two million bookings a month through that app and we'd like to see that number go up three to four x. And so, when I used the OpenTable analogy before, that's really what we're hoping to be able to drive this to. We've got 65,000 businesses now on the platform. Two million app bookings that are coming in this year. We'll do north of 300 million in revenue. And, I think that we're going to process somewhere around $12 billion in payment transactions. So, the platform is very scaled at this point, but the consumer play is really the X factor for us. I think we've got the SaaS side down and now we've just got to go figure out how to scale the consumer opportunity.
Mark Moses: Josh, you're a wonderful friend, a great family man. Great dad, great husband, and an inspiration to our forum and an inspiration to those here.
Josh McCarter: Thank you.
Mark Moses: Thank you for sitting down with us and sharing your story.
Josh McCarter: Thanks-
Mark Moses: Appreciate it.
Page 14 of 15 CEO Coaching International
Josh McCarter: ... for the opportunity.
Mark Moses: Thank you.
Josh McCarter: Appreciate it, Mark.
To inquire about our coaching services and programs, please call 1-866-622-9583.
CEOCoachingInternational.com
Page 15 of 15 CEO Coaching International