Accucode focuses on delivering operational efficiencies, high ROI and core improvements to businesses for them to easily scale their business.
Nathan Latka sat down with Kevin Price, CEO of Accucode to get the inside scoop on his SaaS company. Key highlights include:
- Doing over $100m in revenue
- 150 employees
- Focuses on shifting towards the 4Work launch from hardware
Nathan Latka (00:00):
Hey, folks. My guest today is Kevin Price. He’s the founder and CEO of Accucode. At 27 years old, he’s become a broad technology and services company with over a hundred million bucks in revenue, 150 employees. They’ve got hardware, scale deployment, service and support, 3D printing, and software development in house. Their latest SaaS offering includes four work and order 4Work, which we’ll jump into today. He’s in the process of launching their new 4Work SaaS division, and looking for senior leadership on the business unit. Kevin, you ready to take us to the top?
Accucode CEO Kevin Price (00:26):
Absolutely. Thank you.
Nathan Latka (00:27):
You bet. On the hundred million revenue today, I know a lot of what you do is hardware, right? POS systems for restaurants, things like that. What’s the revenue breakdown, hardware versus SaaS?
Accucode CEO Kevin Price (00:36):
Historically, it’s been about 70% hardware and the balance and services. The 3D division, the small unit today, it’s doing less than a million dollars here in revenue, but lots of interesting stuff.
Nathan Latka (00:53):
Tell me what customers are paying you for. Those that are not familiar with Accucode, what are you building?
Accucode CEO Kevin Price (00:58):
We also have our first early customers on 4Work. 4Work’s the latest software service offering. We have two different products in that suite, 4Work and Order4Work. I’m just in the process of setting up that division, but it’s got about $300,000 a year in revenue. Behind it, it’s all monthly subscription based, and Accucode’s actually been using the software for the last eight years to run its own internal operations. I call it order to end of life, but it’s workflow automation and business process automation for just about any kind of process or technical industry you can think of.
Nathan Latka (01:36):
Again, a hundred million in revenue, 70% is hardware. The other 30 is services in SaaS. There’s 30 million there of revenue. What are the other software platforms that you’re selling to make up that 30 million in software revenue?
Accucode CEO Kevin Price (01:49):
It’s other people’s software, warehouse management systems, industrial, what do they call it? Manufacturing, automation, that kind of stuff.
Nathan Latka (02:03):
You’ve built these tools and sold them to warehouses?
Accucode CEO Kevin Price (02:06):
Nathan Latka (02:08):
Accucode CEO Kevin Price (02:09):
We’re also doing a lot of R and D work around artificial intelligence, particularly natural language chat bots and visual cognition. The ability to use cameras to collect data, for instance, in your manufacturing or warehousing environment. We’ve even talked to food processors and others about using it to do quality control and product identification, all just with cameras.
Nathan Latka (02:33):
Okay. That, just to be clear, those tools you’ve built for warehouses, things like that, that’s doing about $30 million a year right now in revenue software?
Accucode CEO Kevin Price (02:41):
Nathan Latka (02:41):
Okay. Then tell us a little bit about the hardware space. Is it still mainly POS systems?
Accucode CEO Kevin Price (02:49):
It’s actually networking infrastructure is our biggest category, and has been for a long time. Cisco, Extreme Networks, Aruba, Nokia are all partners. We’ve deployed tens of thousands of commercial networks. Luman is one of our biggest customers, and we do all of their B2B network deployment work for their mid-market customers.
Accucode CEO Kevin Price (03:15):
4Work, that piece of software is what runs that whole field services operation for Luman. We share real time visibility of all those projects with Luman through that platform.
Nathan Latka (03:25):
On that $70 million of annual hardware sales, are your margins basically zero? Is that a loss leader for your software stuff? Do you make money on it?
Accucode CEO Kevin Price (03:31):
Oh no. Not at all. No. The hardware business has always been, I refer to it as a self-funding business development activity. The margins are not great, but it’s always profitable. You have to know how to run that business and run it profitably to do it. It’s all about scale. I want to sell it to you by the truckloads, and ship it to you by the box.
Accucode CEO Kevin Price (03:58):
We’re in the distributed device population. That’s our core business. As we see things like IOT and robotics explode because of labor market issues, people have a challenge of how are you going to acquire deployed service and support? Tens of thousands of devices potentially at hundreds of thousands of location. We built software specifically for doing that.
Nathan Latka (04:22):
Oh, what’s going on there, YouTube. Good to see you guys. Now, imagine this: you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I’ve done manually. Saves you a lot of time. Well, we’ve done this. We’ve built it into the beautiful interface inside of FounderPath. Check this out. I’ll show you how you can access this in a second, but you log in, you connect your Stripe account, you see your valuation real time.
Nathan Latka (04:47):
You can see what it changed over the past 88 days, and even set goals for valuation this year. Now, the secret valuation is there’s many different ways to value a SaaS business. The reason you’re going to see three or four different valuations inside of your FounderPath dashboard, this is all free by the way, is because depending on who’s doing the buying of your SaaS company, you’re going to get a different valuation. A VC’s going to pay a different valuation. Private equity firm is different. If you’re going to do a minority sale, that’s different. If you sell the whole business, that’s a different valuation.
Nathan Latka (05:20):
You can see all those when I hover over here. The teal is what a VC would pay. Yellow is what private equity, and red is if you sold the whole thing outright. Now, what’s cool about this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. Traction, 1.2 million. Seed round, 3.7 raise. They sold 22% of their business.
Nathan Latka (05:46):
Go in here and filter by the event. Maybe you only want to see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you’re going out right now and you’re raising your seed round. Well, go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There’s never been a larger data set of SaaS valuations than what you can get now inside of FounderPath. We’re thrilled to bring it to you.
Nathan Latka (06:17):
All right, we’re going to go back to the YouTube video here in a second, but if you want to check this tool out, if you want to jump in and sign up, you can check it out for free to get your valuation at this link. This link, FounderPath.com/products/valuations. If you go to FounderPath.com and hover over products, click on get your evaluation here, and go ahead and sign up to give it a whirl.
Nathan Latka (06:39):
Again, all that valuation data live, right inside the platform. I hope to see you there. All right, let’s jump back into the interview.
Nathan Latka (06:47):
Just to be clear, those pieces of hardware, are you actually building these yourself, or you’re buying them cheap, then marking them up?
Accucode CEO Kevin Price (06:57):
We have a new AI kiosk called our Edge AI Kiosk. That is our own in-house design and manufactured device, but all the other hardware we’re selling today is made by one of the market leaders in those categories.
Nathan Latka (07:12):
Interesting. Okay. What markup do you like to make for yourself? We’re talking 5%, 10%, 30%?
Accucode CEO Kevin Price (07:18):
Typically, gross margins run between 12 and 20% in the hardware space. That’s gross margin, not net. Like I said, it’s always profitable.
Nathan Latka (07:30):
Yep. What is net, like 5%? 2%?
Accucode CEO Kevin Price (07:34):
Probably more like three or four.
Nathan Latka (07:36):
Okay. Okay. Interesting. What got you into this? Were you an electoral engineer or something in college, or when did you start?
Accucode CEO Kevin Price (07:43):
No, no. I bought a Commodor 64 when I was nine years old, back in the seventies, and taught myself basic. I’ve always been a science and technology nerd. I’ve studied physics and electrical engineering and chemistry since I was very young. My degree is actually in business, and particularly in marketing, but I’ve never let that stop me. From a product standpoint, we take on almost anything. We’ve done all kinds of different technology.
Nathan Latka (08:16):
Makes sense. Now, what’s the team size today? How many full time?
Accucode CEO Kevin Price (08:20):
Like I said, about 150 full time employees, and at any given time, several hundred contractors that are out in the field doing this install work.
Nathan Latka (08:31):
Those in the field folks, they’re installing on prem routing software, or routing IOT stuff, or what?
Accucode CEO Kevin Price (08:36):
Yep, exactly. We’re doing routers, switches, access points, DNF connectivity. Basically, we’ll go do a physical deployment at a bank or a restaurant or a factory or a warehouse. We’re taking it from the D mark, which is where the telecom provider brings it onto the property, all the way through the facilities and designing the network specifically to cover all the operational areas with adequate bandwidth. That’s the bulk of what we do out in the field. We also …
Nathan Latka (09:09):
Oh, you’re muted, Kevin. Go ahead. You also what?
Accucode CEO Kevin Price (09:16):
I said, we also run repair work and other processes in the field like that as well. The same software, 4Work, is what drives all of those processes for us.
Nathan Latka (09:26):
Have you bootstrapped this or raised capital?
Accucode CEO Kevin Price (09:30):
I’m still bootstrapped. I’ve sold three different software to service businesses previously. The biggest one was for $25 million. We sold it to Descartes a little over four years ago.
Nathan Latka (09:43):
Was that all cash upfront, or was there stock there too and earn out?
Accucode CEO Kevin Price (09:47):
No, that was all cash. Cash deal. There was some payments on the second year and the third year out, but the bulk of it was upfront.
Nathan Latka (10:01):
How much revenue was that company doing when you sold it?
Accucode CEO Kevin Price (10:03):
I was doing about five and a half million in revenue, and delivering three and a half million a year in EBITDA on that.
Nathan Latka (10:09):
Oh, wow. That’s a nice little multiple there. You own 100% of that?
Accucode CEO Kevin Price (10:13):
Nathan Latka (10:14):
That’s great. Now, you’re obviously building Accucode. Why build the software company inside the hardware company? Why not build them as separate companies?
Accucode CEO Kevin Price (10:23):
I’ve really turned Accucode into my platform. Just like Accucode funded and employed the developers that built the product, we were also using it very actively. It runs our whole business. It’s Accucode’s intellectual property, effectively. My marketing department, my accounting department, my HR department, all support all of these different business units. Capital from the sale of that Velocity mail software, that 25 million is part of what funded the acquisition of the 3D printing store and what we’re doing …
Nathan Latka (11:01):
Oh, is that how you got Accucode started? You used money from your last sale to buy a 3D printing store? That was the start?
Accucode CEO Kevin Price (11:07):
Well, that wasn’t the start. I bootstrapped Accucode by myself from 1995 forward. 1500 bucks on my credit cards, and I’ve bought a lot of money from banks and paid it all back. They loved to loan it to me, but I’ve had three successful exits of software divisions that were startups inside of Accucode. Basically, it’s become my own platform.
Nathan Latka (11:35):
Oh, you build a software inside of Accucode, and then when you sell it, you spin it out and sell it off to the other provider?
Accucode CEO Kevin Price (11:41):
I run them as separate LLCs. I run them from day one as a standalone PL inside of Accucode.
Nathan Latka (11:50):
Accucode CEO Kevin Price (11:53):
It actually makes it easier to exit, because they only have to take the operational staff tied to that particular product. They don’t have to take my marketing and my sales and my accounting. Typically, in an acquisition situation, they would lay all those people off anyway.
Nathan Latka (12:09):
Yep. Yep. 4Work is an individual P and L, but inside of Accucode?
Accucode CEO Kevin Price (12:15):
Nathan Latka (12:16):
I see. Hell a story here. What about the flip side? Have you bought any companies to bring inside of your platform?
Accucode CEO Kevin Price (12:22):
The one only acquisition I’ve done was the 3D printing store about four years ago.
Nathan Latka (12:27):
Tell me about that real quick. What does the 3D printing store make in a year?
Accucode CEO Kevin Price (12:31):
Oh, it’s tiny. It’s doing like a million dollars a year in revenue.
Nathan Latka (12:36):
Why buy it?
Accucode CEO Kevin Price (12:39):
It’s another distributed device population, where additive manufacturing is going to be the future of how we make a lot of things. Today, there is a complete lack of a thoughtful, organized approach for how you’re going to acquire, deploy, service, support, operate that kind of technology. There’s not nearly enough qualified engineers, mechanical engineers, on the planet to do the install, the operation, the service ,and support.
Accucode CEO Kevin Price (13:08):
If you’re going to go scale this, somebody needs to go build a plan tool that makes that a feasible concept. The printer manufacturers focus on, “Look what I can print,” but typically, they can only print it successfully once. It often takes two or three attempts to get the one right. As I say, that’s cute that you can do that, but it’s not very valuable.
Nathan Latka (13:32):
What did you pay for it? A million dollars a year printing store company?
Accucode CEO Kevin Price (13:38):
It was more a matter of we made a commitment to a capital investment. I put over $2 million into new equipment and facilities and staff. We now have the ability to print hard metal parts, high temperature polymers, fiber reinforced plastics, all kinds of different materials. We’ve got a facility in Dallas and another one here in Denver. We do a lot of business in the aerospace sector and the energy sector, oil rig operators are using 3D …
Nathan Latka (14:08):
Oh, you own the majority equity of that 3D printing store because of your $2 million capital injection?
Accucode CEO Kevin Price (14:14):
Nathan Latka (14:14):
Is the owner still operational, or is he or she exited?
Accucode CEO Kevin Price (14:17):
No, Deborah Wilcox is the founder. She’s the operational manager of the business. She’s actually an IP attorney by trade, and started this, basically ,was running this as a personal project, and was operating out of a hangar, a local private airport, and running a small service bureau. I met her and asked her to come run my 3D division.
Nathan Latka (14:43):
Interesting. Last question, are there any tax advantages to having Accucode, HoldCo, and then doing standup P and Ls for individual software companies underneath, in terms of how you treat cash flow?
Accucode CEO Kevin Price (14:53):
Oh, for sure. The bar business has allowed me to bootstrap several softwares and service businesses, and run them with minimal overhead. The tax advantages that Accucode gets to be very flexible with how it chooses to expense or capitalize that R and D investment, and the other resources that we put behind those business units.
Accucode CEO Kevin Price (15:19):
It makes, I would say, a lower risk proposition. I think there’s also a cost to that, because it’s not the sole focus, and because a lot of the resources are shared, it takes longer to scale it that way.
Nathan Latka (15:33):
Yeah. Yeah. Kevin, heck of a story here, man. We’re out of time. Let’s wrap up with the famous five: number one, favorite book?
Accucode CEO Kevin Price (15:40):
Oh, just recently the Surrender Experiment.
Nathan Latka (15:44):
Surrender Experiment. Number two, is there a CEO you’re following or studying?
Accucode CEO Kevin Price (15:50):
I love Elon Musk, although I really wish that he would be a lot more quiet on social media.
Nathan Latka (15:57):
Number three, what’s your favorite online tool for building Accucode?
Accucode CEO Kevin Price (16:05):
Probably Google. Accucode’s been running on Google Docs and Google Apps now since 2007. It has just been an amazing tool for collaboration and data visability.
Nathan Latka (16:17):
Number four, how many hours of sleep do you get every night?
Accucode CEO Kevin Price (16:21):
Six to eight.
Nathan Latka (16:22):
Okay. Situation? Married, single, kids?
Accucode CEO Kevin Price (16:27):
Single at this point, twice divorced.
Nathan Latka (16:30):
Accucode CEO Kevin Price (16:30):
Nathan Latka (16:33):
Three kids. Okay. Very cool. How old are you?
Accucode CEO Kevin Price (16:34):
Nathan Latka (16:37):
Last question, some …
Accucode CEO Kevin Price (16:40):
Started this when I was 26.
Nathan Latka (16:41):
I love that. I love that. Last question, something you wished you knew when you were 20?
Accucode CEO Kevin Price (16:51):
Oh. Think bigger.
Nathan Latka (16:53):
Guys, Accucode, a platform launched when he was 26, now doing over $100 million in revenue. 70% of that revenue is from hardware sales, think routers, on-prem installations, things of that nature at banks. 30% of those, these little software companies, not little though, he spins them up inside the business. They collectively do 30 million bucks in revenue. Then he sells them.
Nathan Latka (17:10):
He sold his last one a couple years ago for $25 million after growing that to five million bucks in revenue, three million in EBITDA to healthy multiple. Then he reinvests that all back into the company. 150 folks full time today, as he focuses and doubles down on his new software products, called 4Work. Kevin, thanks for taking us to the top.
Accucode CEO Kevin Price (17:25):