Run events and create payment processes within Salesforce | Chris Federspiel - Blackthorn
Chris: At Blackthorn, we make apps for the Salesforce platform. If you run events on Eventbrite or similar apps, and you use Salesforce, you can use our app instead, and if you want to make payments, you can use our application too.
What are your products?
Chris: We have a few different apps. They’re mostly geared towards higher ed and nonprofits. If you run events or make payments or want to send a text message, or if you want to do more with compliance with PCI and masking credit card information, you can use Blackthorn. We also have another one coming, which we call the storefront. If you want to sell continuing or executive education as higher ed, then you can do that. We separately have almost two businesses in one where we have a mobile payments application as well, so if you want to take payment when you’re in the field, if you’re doing field service type of work, you can do that. Still, it’s more of for enterprise B2B type of business.
What is the biggest problem that you solve?
Chris: One of the biggest problems for businesses is that their data is in multiple places, so they can’t make a single picture of the customer. That’s what Salesforce is solving in the first place, but you can’t report on it when you add information to all these other systems. If you paid for a service with an organization and went to one of their events, and you bought a course that would typically live in three systems that are all not part of your CRM, so then the company has four records of you, and they can’t really make sense of it. We’re solving that at the foundation.
Best Blackthorn features
Chris: In our events app, people like how you can translate. We can translate events into any language with a static translation with payments, and you can type in card numbers and use a physical card reader. I mean, it’s a very common feature that many applications have, but it’s very uncommon for anyone running Salesforce. And another feature I really like is our mobile check-in app for organizers, so you can like swipe people into your event when they join.
Blackthorn pricing plans
Chris: The pricing really ranges. More or less, it starts at around $10,000 a year for organizations, and then they go up from there.
Very specific integrations
Chris: I think we integrate with 30 systems at this point because everyone has different stuff that they’re running. For payments, we have Stripe, Spreedly, TouchNet, and CashNet, and then within Stripe, they have seven different APIs that we’re integrating for our events app. We clear the data through AWS and are working with Cloudinary for our CDN with CloudFlare for DDoS and global load balancing. And then we have many webinar integrations like Zoom or Webex. There are also email integrations, MailChimp, Twilio, and WhatsApp, but we have many integrations.
How do you differentiate from your competitors?
Chris: We do have competitors, but what was unique about us is that we were the first organization that really focused on delivering events for Salesforce. There were a few other companies doing it, but they often did an ancillary, had a core business doing something else, and never really focused on this. They didn’t put as many devs behind it and didn’t have the same feature velocity. Now our main competitor is mostly just Cvent, I guess. But they’ve been building theirs for like 20 years, and their architecture is different. They don’t use Salesforce as a system of record and have an integration application. There are a lot of foundational differences.
Starting the company and coming up with the idea
Chris: We started the company in 2015, so it’ll be eight years now. I was running a Salesforce implementation company at the time. We implemented Salesforce for people, but then I used a lot of the existing payments apps, and none of them integrated with Stripe, and they needed a lot of custom dev work in order just to be able to function. And that’s like not what an app is supposed to do. We made this payments app, and then my co-founder at the time, he’s no longer with the business, but he had the idea to do the same thing for events. There were other events apps at the time, but they were quite a bit harder to use and didn’t have several features we wanted.
Our stack is unique because our events app uses our payments app for checkout. When you go to make a payment, our customers have both installed, so it looks like we’re running two different things simultaneously, but it’s part of the platform.We have 106 people across 15 countries and 23 US states, and we were remote from the beginning and didn’t change anything from the pandemic.
The problem with raising funds for Blackthorn
Chis: In 2018, we almost went bankrupt, and my aunt put in some money. My friend threw in like $50K, and the launch accelerator that Jason Khans found put in $100K. And then, the next year, employees wanted ownership over just stock options. And they insisted on buying shares. I was fine with that, and they bought like $180K, which was all that we raised for a while to pay for salaries. That’s like nothing. Usually, rounds are minimally a few million dollars to get started cause the payroll is just a lot.
But last year, we had a big debt facility, so we now have an $18M debt facility with a four-year interest-only period, and then there’s a balloon payment structure at the end. That’s been going quite well, allowing us to grow quickly. Our partners in the deal are level equity and RF partners, and they’ve been great to work with, and it’s working well. We are a bit unique also because we don’t have a board. Usually, by this size of a SaaS company, you have a board that allows some nice flexibility. We do a four-day workweek, and I don’t know what a board ever would’ve thought about that. No one is pressuring us, so we must do anything in particular.
Why did you choose debt over VC funding?
Chris: It’s a good question. It’s a luxury that you don’t have when you’re starting. Io one will give you debt on no revenue, which doesn’t exist. We actually went with Capchase, which offers revenue-based financing. Before, we went to a structured facility, and they helped us. I bought two companies in 2021, and they helped us buy a company, and then they helped us scale a whole bit before then, but then we wanted to do something much bigger. Their creditors have specific limits on the amount of risk.
To do something that’s a lot more leveraged to go, like one-to-one of debt and ARR, all the revenue-based financing ones, they’ll go up to like maybe half, like 50%. But if you want to do one-to-one, you must go outside the revenue-based financing to do traditional diligence. We didn’t do that with this bigger one until we were around $8 million ARR, we are at $13 million now, and we’re looking to be breakeven by the end of the year, which should be around $20 million. And then, at that point, we’ll probably go for a senior debt facility. These banks are lesser-known banks, and it’s not like JP Morgan or Bank of America.
Pitching 100 investors, got 100 noes
Chris: To answer why we went this way, in 2018, I pitched a hundred investors in person as part of the launch accelerator, and I got a hundred noes. Zero people wanted to invest at all. It’s not that I didn’t want to do it. I just didn’t have a choice. We had to scramble then for a few years, keep costs tight, launch stuff, get lucky a few times, get some prepayments, and eventually, I had around 52 investors reach out that all wanted to invest.
I didn’t approach any of them. I said – sure, you can invest, but we’ve made it this far, so I don’t want to have to put a board in place to be able to do it. Do you want to do it? And only one group was open to it after talking to all these people, and the valuation they wanted was not great, but the problem with it is that a lot of these groups have to have their checks be a lot bigger, so they’ll have minimum check sizes of like $15 million.
And the problem with writing a $15 million check at a lower valuation is that we didn’t need $15 million, and because of that, we would’ve had to have diluted at a valuation that I didn’t want to do. If they had said – hey, we’ll do 5 million at this valuation, I would’ve agreed to it. These numbers sound big, but our payroll is $10 million a year. If you think about scaling, if we’re at $13 million a year with a $10 million payroll, you really need pretty significant money if you want to be able to hire ahead of revenue.
Because they didn’t give us a great valuation, I said – okay, what other options are there? We looked into these bigger debt facility providers, and Mike Bauer was at Level Equity at the time. He got pretty creative with what they were able to offer us, and they could do more debt than other providers were willing to do. I don’t know why, but they did a little bit of equity where we did some stock buying. We gave some earlier investors, my aunt, and my friend. We did some buybacks and a small bit of liquidity for me, which helps because if you’re a founder and are doing something for a long time, it helps to take chips off the table, as they say.
The myth of great boards
Chris: I’m in a founders’ group in New York City with 250 founders, and all of them, in addition to every founder I’ve ever talked to, except one, have said that they can’t stand their boards because they’re described as vultures who always want more. I’ve read some amazing things about some great boards. There are some great advisors out there, people that have done this before, particularly when you get founders onto boards because they have a different type of mindset. They’re not pushing you for growth at all costs. They’re not saying you must fire all these people to do something else.
One of the reasons I started the company was that I didn’t want a boss. And if I had to put a boss in just to get the funding that we wanted, it wouldn’t make sense. Those are the reasons that I did it, but it became a kind of personal. If we were in a very competitive scenario and our main competitors raised 100 million dollars, and the only way we could do it would be to just go after the same thing, I don’t know if we would’ve had a choice.
Don’t forget that debt is risky too
Chris: The problem with debt is that if you can’t get your revenue up, what happens when the money is due at the end? There’s this cons concept of venture debt where a lot of very unfriendly clauses come into play where the debtors can end up forcing a sale of your business if things like go the way you want them to. And a lot of times, you actually can’t get venture debt unless you have VCs on the board. A group like Silicon Valley Bank, one of the most famous banks that do venture lending, will not give you any money if you don’t have any VCs on the board., which is fine because that’s the position of a lot of these groups.
But, there are horror stories about venture lending. I saw Paul Graham did a tweet about how he always advises people not to do venture lending. I’m not sure about all the reasons, but I know the one that could be very scary is if you don’t get your revenue up and, for some reason, it goes down, you can get pretty stuck. For us, it was very minimal dilution compared to what a round would’ve been. You know, a traditional round is 15-20% and sometimes 25%. Sometimes two or three liquidation preferences are things that are not enjoyable. That’s why we ended up going the way we did.
What’s your future vision with Blackthorn?
Chris: We have a lot of stuff that we’re launching around April that we’ve built. We have been building for about a year and a half. We rebuilt an event wizard in the application, our storefront app coming out, and a virtual events app coming out. It’s three years late, and all the other companies did it really fast, but we have that coming out, and then we’re going to layer our mobile attendee app coming out. There is a lot that’s coming for the events arena as well as the storefront. But then the next wave on top of that is a way to bring it all together.
As an organization, you then have every single one of our apps, they all function in this unified manner, and I have no desire to take this company public and ring the bell and stuff. At some point, in a few years, we’ll likely go running a process to sell unless someone randomly comes in with some wild, crazy thing before then. But there’s a lot more oroduct that I want us to launch that we’ve been working on, and we’re just starting to really hit this inflection point where much larger organizations are now inquiring with us to get going. This is an eight-year overnight success, I guess. Now, this is finally working.
What is your story, Chris?
Chris: I have parents who were not the most loving. My dad hit me quite often, and my mom used to do the same. She used to chase me around the table with a paddle and go to hit me. I didn’t like being around them. This led to a lot of depression, and when I was around 20, I found out I have bipolar too. I was depressed as a kid, but no one ever slapped a label on it. And I’ve been on medication since. I’m giving you this backstory because these things combined push me to be alone and to be alone. And if you’re by yourself all the time, a computer is a pretty nice outlet.
I was fortunate enough to have a computer at a pretty early age. I think I got a computer when I was nine years old. I’m 41 now, whatever math that is. I really like doing stuff with operating systems and learning stuff about code. I’m a terrible developer and never ended up being a developer. I can read through sequences, took computer science classes, and then did some work for a friend in high school writing these scripts. When I was in middle school, there was a local internet service provider, like when you do dial-up modems. They used to pick me up from middle school and high school to go and then build their customer’s websites.
I was doing that for a while, then I took a hiatus for like a decade during college, did property management for real estate and stuff, and got back into all this computer stuff in 2011 with the Salesforce ecosystem working for a friend. Then, it took off from there. I enjoyed Salesforce because you could be rather technical without being a developer. It was a bit unique in that sense. I always enjoyed the architectural piece,
Then I worked at his company for two years, helped him grow it, and got all semblance of understanding of the business. I was very into the Salesforce admin pieces, and I was also into the sales piece and doing all this. Then I worked for another company for a year and a half, and they eventually fired me. Long story short, now I’m friendly with the owners as they later apologized for how it happened, but things happened whatever. And then, I started my implementation company and ran that for a year and a half with another guy, and then Blackthorn started.
What’s your best piece of advice for founders?
Chris: I would say that it’s very easy to end something. It’s very easy to quit a business, a relationship, or a hobby. You can wake up the next day if things get really tough because they will always get tough at some point. If you want to quit, you can just literally quit that minute. But if you don’t quit, it doesn’t mean it will work. It just means it has the best chance of working that it could possibly have if you didn’t quit. And it’s very easy to want to quit. There were many, many times I wanted to quit. I couldn’t sleep, I was crying, and I had suicidal thoughts, it was horrible.
But that’s my advice if you’re thinking about quitting, just know that it’s very easy to quit. You can do many things before then without having to do that. It doesn’t mean it’s gonna work, but this is the best chance it has. Running a company is not for everyone, but if you started a company, that means you clearly have wanted to do it. And I’m happy to talk to anyone who’s doing this. My email is firstname.lastname@example.org, or you can add me on LinkedIn. It’s really hard, but it’s rewarding.
What’s your favorite software apart from Blackthorn?
Chris: I love superhuman, Raul Vora software. When I started using the thing when it came out pretty early because Jason Khans helped Raul fund his first app, the LinkedIn report, now LinkedIn Reportive, and then he helped them fund this. They had two years without launching. And then they eventually launched it, and it was just so much faster than Gmail. I got a lot of people in our team using this thing. I think we have 15 or 20 of us using this thing, and it’s way better.
Connect with Chris