December 3, 2024 • 43 mins
Dan Balcauski speaks with Jason Ray, co-founder and CEO of Paperless Parts, a Boston-based SaaS company revolutionizing the custom part manufacturing industry. Jason shares his journey from Navy logistics to entrepreneurial success, highlighting the challenges of scaling a SaaS company, identifying real customer pain points, and learning from rapid growth funded by venture capital. Jason emphasizes the critical role of a great CFO, the evolving responsibilities of a CEO, and the resilience needed to persist through difficult phases. Tune in for invaluable insights on scaling a SaaS business, building the right team, and maintaining perseverance.
00:30 Meet Jason Ray: From Navy to SaaS
01:21 The Search Fund Journey
01:55 Discovering the Software Opportunity
05:05 Building the Marketplace
07:34 Pivot to Quoting Tool
14:37 Challenges in Scaling
21:39 The Importance of Financial Outcomes for Employees
22:42 Challenges in Scaling from 5 to 15 Million ARR
26:29 The Role of a CFO in Business Growth
30:40 The Impact of Venture Capital on Business Strategy
34:49 Navigating Financial Constraints and Growth Expectations
39:42 Reflections on Success and Mentorship
41:25 Final Thoughts and Advice for SaaS CEOs
Guest Links
Connect with Jason Ray on LinkedIn
Paperless Parts
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dan Balcauski (00:20):
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories from the leaders of the
best scale at B2B SaaScompanies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I'm excited to speak withJason Ray.
Jason is the co-founder and CEOof Paperless Parts a Boston
based SaaS company leading thedigital transformation for
custom part manufacturers.
A Navy veteran with a passionfor modernizing traditional
(00:41):
industries, Jason has guidedPaperless Parts from startup to
scale up, successfullynavigating the challenges of
rapid growth along the way.
Let's dive in.
Welcome, Jason, to SaaS ScalingSecrets.
Jason Ray (00:51):
Dan, thanks so much.
I really appreciate you havingme.
Dan Balcauski (00:54):
I am Very excited for our conversation today.
I'm sure our listeners will geta lot of value out of it.
Jason, I gave you the audience alittle bit of a taste of your
background in the intro, but forthose folks who haven't been
following your journey closely,can you just tell us a little
bit about your journey in theSaaS world?
Jason Ray (01:09):
Yeah, I, thank you.
Appreciate the opportunity.
I grew up in the Navy, so Ispent seven years on active
duty, supply corps focused onlogistics, the business end of
the Navy.
When I left active duty, I hadalso finished a MBA at Babson
and decided to go into thesearch fund route.
I figured, maybe I can go buyone of these traditional
(01:30):
businesses.
Be a part of the defenseindustrial base really solve
some of the problems that I sawwhile I was on active duty.
And at the end of the day, Irealized how hard and how
challenging are our industry isto survive in, the manufacturing
industry is very unforgiving.
It's run by entrepreneurs thathave an enormous amount of
(01:52):
technical aptitude for whatthey're doing.
And that really is the firsttime I started to think about
software.
I witnessed these businessesthat were being run by sheer
brute force.
You had filing cabinets filledwith technical drawings.
You had Excel spreadsheetsshaved, saved in all kinds of
different share drivestructures.
And I mean, it was just aunbelievably complex business to
(02:16):
successfully navigate.
And I remember explaining to myco founder, Jay Jacobs at the
time, I said, Jay, I'm nevergoing to be able to buy a
machine shop and run one ofthese businesses successfully.
Like that would be truearrogance to think that I can
replace someone who's beenrunning the business for 30
years.
And all of a sudden I'm going tostep in with my shiny new MBA.
(02:39):
And all of a sudden I'm going tomake that business as successful
or more successful.
I just, I didn't see ithappening.
Right.
And so when I went to walk awayfrom it, Jay was the one who
said, you should build asoftware company.
There's something here.
Manufacturers need good softwareand there's no one going after
this problem right now.
(03:00):
Why don't you write a businessplan for that?
And that's how I got into SaaS.
Dan Balcauski (03:04):
That's a fascinating story.
So, and for folks who maybearen't aware, could you just
give us the very high level onwhat a search fund is?
I it's become pretty hot in theNBA world, but I think
relatively recently, so maybeeveryone's not quite aware.
Jason Ray (03:17):
Yeah, a search fund model is a model where an MBA
usually goes out and searchesfor a business to buy.
And they either do that withcommitted dollars where
investors will say, Hey, we likeyour pedigree.
We think you've got a good planfor going into a specific
industry, buying a business,growing that business.
(03:38):
Usually you're buying a businessthat has Revenue and profits.
So it's less risky.
And a lot of times MBAs, theywant to be entrepreneurs, but
they don't really have aparticular idea to start the
next new thing.
You're also seeing a prettysignificant change in
generational ownership andwealth in this country.
(03:59):
And so what's happening there isyou're seeing this industry, our
manufacturing industry, butyou're seeing a lot of
industries turn over.
So that makes it a reallyattractive search fund model.
The searcher gets equity in thebusiness.
They earn that through a lot ofsweat equity of searching for a
business to buy.
Some people will search for upto two years before they end up
(04:21):
buying a business.
I spent about 11 months and thenrealized, how much I didn't know
about the business I wanted totry to buy.
So I was able to, I was able toreverse course pretty quickly.
Dan Balcauski (04:33):
Got it.
So, so if I just tie togetherthose two pieces of the story so
basically you are in this searchmodel looking to go buy one of
these smaller, manufacturingcompanies, and as you're in that
process of evaluating thebusinesses, this is when you
sort of discover this problem ofrunning these type of shops.
Jason Ray (04:54):
Yeah.
And we didn't even really have agreat problem definition when we
first started.
We initially thought the problemwas a lack of technology to
connect.
The buyers and the suppliers ofmanufactured products like very
high level statement and circa2016 marketplaces were super
sexy.
(05:14):
So we're like, let's go build amarketplace.
We'll go set up a marketplacethat applies a bunch of cool
technology and makes it reallyeasy for.
A buyer of an industrialcomponent or assembly to come in
and find new sources of supplyand transact with those sources
of supply very easily.
And it all sounded really goodon paper.
(05:35):
And we raced after this.
I mean, we spent eight monthsbuilding the coolest marketplace
in the world.
And those moments in your lifewhere you expect it to be
fireworks, like you are justlike, the anticipation is so
high.
We had spent months preparingfor this launch.
My co founder Scott Sawyer and Isitting there and like, we click
(05:58):
the button to turn it on.
And it was like, it was therewas soon like fireworks and a
party popper.
It was kind of like, like, waita second.
Like we had beers.
It was, we were ready to go.
Like we're so pumped.
And I remember sitting there forlike, Like an hour before
someone actually came to thesite.
And mind you, we had toldthousands of people that the
(06:19):
site was launching.
So, but we had one and Iremember him looking at me and
he's like, there's one, Oh myGod, there's one.
And I mean, for the next coupleof months it kind of puttered
along, we had dozens oftransactions.
We had initial, initial peoplecoming in, telling us that it
was really cool.
But at the end of the day, itwasn't.
(06:42):
It wasn't something that wasever really going to scale and
it wasn't actually going tosolve the problem we wanted to
solve.
And so stepping back from thatwe were going to put the whole
business to bed.
We told Jay, our co founder, wesaid, Hey, this isn't going to
work.
We'll give you what money wehave left back.
And we'll all go on our way.
(07:02):
And Jay is, and this is Jay to acore, since we've started this
business, has always been theperson that's said, don't give
up, keep pushing go ask harderquestions, go figure out where
the problem is, go solve it,I've got your back.
And he always has, and I thinkthat's great.
A little bit of like, I thinkwe've often gotten to cheat a
(07:23):
little bit.
Cause not everybody has a personlike that has such conviction
that what you were doing isnecessary for the world and has
experience in the industry whereyou were trying to solve
problems.
And so Jay was the one whopushed us to go out and try to
understand what's the realproblem that we need to solve.
And everyone that we talked toquoting, quoting, quoting,
(07:47):
quoting, it is hard to quote.
It's risky to quote.
I don't trust anybody to quote.
I'm an owner.
I'm not scaling, but I'm goingto quote because I won't trust
another person in my shop to notscrew this up.
And I think if there's any onething we did right at Paperless
Parts in the last eight years,it was identify something that
was actually a real painfulproblem.
(08:12):
a, not a problem that's, a niceto have.
I've heard it explained as, areyou a vitamin?
Are you a painkiller?
Are you oxygen?
And I think we're somewhere inthat, like.
painkiller, oxygen category.
Probably painkiller killer whenyou first come, try to buy
paperless parts, more oxygen.
Once you've really started usingit and you realize that there's
(08:35):
a completely different way torun your business.
But that's, I think that'sprobably the thing that we've
done that I would point
Dan Balcauski (08:42):
Well, I, I wanna double click on that because I
think that's a great point.
So, you first of all, I thinkthere's there's some goal to be
had even in the disappointmentof the party popper versus the
fireworks.
I once had a business coach whenI was being a little bit
hesitant about pivoting in acertain direction, say, we'll,
go do it.
Because if you failed, no onewill even notice because it's
(09:02):
not gonna be relevant to them.
So, so I think that there's somegood news there for any
entrepreneur's.
Like, yeah, don't worry aboutyour big launch.
Don't worry about going in thisdirection.
Cause it's not relevant.
Like nobody will even rememberor care.
So, no one will even see yourfailure.
I think we have this big ideasome, somewhere we got in our
heads that everyone's looking atus and waiting for us to do
something and actuallyeveryone's just busy kinda
(09:23):
living their own lives so Ithink there's even in those
moments there's a lesson of Ofmaturity and gold to be had but
i wanna double click because, inthat arc that you just painted,
there was hey we were reallyfocused on this problem we went
a whole hog on it for 18 months,we launched, to, little fanfare.
And then we, we found thisproblem around quoting that was
(09:43):
super, painful and valuable.
What changed, like, what wereyou, what was the team doing
there that allowed you to sortof like in that new world, like,
did, I mean, was it just likepure luck you just stumbled on
this or was there a method thatyou were able to sort of figure
out what problems that peoplewere actually, willing, see,
actively seeking a solution for?
Jason Ray (10:03):
think.
When we went to turn themarketplace off, cause that was
decided.
We're like, we're going to turnthis thing off.
It's not working.
We went and talked to a lot ofthe manufacturers to let them
know.
We wanted to thank them forbeing a part of it.
We'd spent a lot of time withthem.
And the vast majority of themsaid, yeah, great idea.
Wish it was going to work outbetter.
(10:24):
But there were about a half adozen folks that said, wait a
second, you can't turn this off.
And that, this is, I think,where the luck came into play.
So these folks, as manymanufacturers are, they are
super they have high level ofingenuity.
I mean, they really figure outhow to solve problems, but they
do it in a little bit of aroundabout way.
(10:45):
And so these manufacturers thatwe had talked to that said, we
can't turn the marketplace off,they were signing in to the
buyer side of the marketplace,Loading part files.
and looking up their own pricingand they were using the pricing
engine we had built as a quotingtool.
(11:05):
They were copying and pastingthe prices into word documents
and sending quotes out.
I kid you not, like sheer luck.
We never would have seen this indata.
And I think that there's alesson there.
A lot of people think that dataalone can tell the story.
One of the core values that wehave at Paperless Parts is that
relationships matter.
I love the concepts of AI and Ilove using technology to solve
(11:29):
problems.
And honestly, Sometimes you justneed to have a conversation with
people.
You just need to talk to them.
Like the data is only a piece ofthe story.
And I'm so glad that Jay pushedus to go out and interview all
these companies.
Cause if we didn't talk to them,we never would have known.
We would have just turned thething off.
We would have gone away.
(11:49):
They probably never would havereached out.
Our emails would have been goneby that time.
And it would have been over.
And so I, I really encouragepeople to just, there's a lot to
be said for picking up thephone.
Dan Balcauski (12:00):
So you were able to figure out this sort of hack
that they were using your systemto use where they were like,
well, hold up.
Like, I'm actually still kind ofusing this other thing, even
though it wasn't something thatyou had intentionally built.
And from there was the seed ofkind of this future direction.
Jason Ray (12:17):
I remember a specific quote where one of the guys we
got on the phone, he says, youcan't turn this off.
And we said, why?
And he said, well, yourmarketplace is total shit.
He's like, but the pricingengine, he's like, now there's
something there.
If you guys would just get smartand go build a quoting tool.
I think you'd really havesomething that we'd be willing
to pay a lot of money for.
(12:39):
And I just I remember theconversation was like, yeah, it
was yesterday.
Cause it was like light bulbsgoing off and we raced.
I mean, we spent the next threemonths hacking together like the
most disgusting looking quotingtool around this really cool
technology that we had foranalyzing 3d CAD models and
drawings and they used it.
(13:01):
I mean, that's another big pieceof this.
I've always been.
And probably still am today.
And this is not a knock on ourengineering team, our design
team, but I think founders arealways embarrassed of their
product.
I think that's just a truestatement.
You're always going to see thewarts.
You're always going to, ifyou're close to your product,
you'll know the things that youwish you had time to go fix or
(13:21):
put polish on, and a lot ofpeople end up waiting too long
to like get it out into thewild.
And so we had paying customers.
They were paying us to keep themarketplace turned on and we had
to get them this gross quotingtool.
And so we raced and we got itout there and we got a lot of
(13:41):
feedback.
I mean, it was it was colorfulfeedback, but I think it made us
better a lot faster and it tookus a while to find product
market fit, I think.
I think there's this expectationthat has been cultivated in like
the VC railroad tracks of howfast you should be able to do
certain things.
And I've, I have a friend whoalways says, don't should on
(14:04):
yourself.
Like there is no real should,like it's, yeah, maybe that's
worth looking at benchmarks.
It's worth understanding ifyou're approaching something the
right way, but differentindustries are really, really
hard.
Dan Balcauski (14:17):
I love that.
So, so ship it, even if it'sgross and don't shit on
yourself.
I think we could both livebetter lives if we took those
pieces of advices under ourwing.
Well you and I before we turnedon the recorder had a, had an
interesting conversation, thisvery What you've painted is a
very interesting story, of sortof that, zero to one journey of
finding product market fit andfinding that thing people are
willing to pay for.
(14:37):
But I think you had a reallyinteresting perspective on how
sort of, look, every CEO, everycompany faces challenges along
the way, but those challengescan look significantly
different, the zero to onejourney versus the one to 5
million.
In your mind, how do thosedifferent revenue milestones,
how do the challenges lookdifferent as you're trying to
grow and scale the company?
Jason Ray (14:56):
Yeah, I think a mentor of mine told me that
depending on your growth rate asa CEO, you'll be trying to
reinvent yourself every sixmonths because what you are to
the business needs to evolve andchange as the business grows and
gets more professional and youbring in different teams.
And I kind of, I chunk it up, atleast our journey, and it may be
(15:18):
different for other people.
There are companies that turntheir software on and they're 20
million in a day.
That wasn't us.
It took a while.
We had very distinct phases inthe zero to a million phase, in
the million to five millionphase.
Five to 15 was particularlychallenging.
And now after 15, it's not thatit's gotten easier.
(15:40):
I think the foundation is cured,like we've laid a lot of
foundation.
We have a lot of processes.
We have a lot of people rowingin the same direction.
And I think the team that youneed and the personalities of
the team you need changes prettydramatically based on what stage
you're in.
That zero to one, you areblazing new trail.
(16:02):
Like you need to be okay withrejection and failure.
And like, it is also doingthings that are completely
unnatural, brute forcesolutions, getting on airplanes,
implementing customers thatdon't look like any of your
other customers.
Cause you're trying to getrevenue.
It just, it's a completelydifferent vibe.
(16:22):
And that one to five, I think,is largely, you're starting to
build some processes and systemsaround it.
But I think the biggest thing toprove there, and it all depends,
these are, like I said, ourphases, we sell, 35K ACBs B to
B, SaaS, it might be completelydifferent for enterprise
companies, but what I found isthat one to five phase was a
(16:45):
critical transition of founderled sales.
So I'm the only person thatsells the software.
I'm the only person that knowshow to sell it, communicate the
value propositions.
It's almost, it's veryevangelical selling.
Of course I love it.
So I'm going to, I'm going todemo the hell out of it every
single day.
And I was doing five demos a dayat least from zero to one.
(17:07):
I mean, it was.
I can see it in my sleep.
It's crazy.
It's like an extension of yourbody.
But then going one to five,finding people that can do that,
that aren't founders.
It's such a transition in thebusiness.
Like you get that first personwho's able to go out and
replicate selling.
It's a total game changer.
(17:29):
And you get a small handful ofpeople that are able to do it.
And then you have to try tosystematize it.
And I think you still get awaywith a lot of brute force in the
one to five realm.
And depending on how fast yougrow there the biggest the
biggest challenge you can getinto is the people that are
right for one to five.
(17:49):
They're comfortable with bruteforce.
They're comfortable withuncertainty, but they kept maybe
a little bit of structure.
They're not necessarily thepeople that are going to go and
grow into those executives thatbuild.
Repeatable, durable processesthat have KPIs that they measure
to.
And, like, I've always found itso funny and it's a worthwhile
(18:11):
exercise regardless of whetheryou do it well or not, but OKRs.
I mean, we talk about OKRs,MBAs, it's like, three letter
acronyms, they're our favoritething.
And I'll tell you what, we wouldgo and spend hours in a room
working on OKRs and get so, so,so granular.
And then we would come backthree months later and we'd be
(18:32):
like, Oh yeah, we didn't do anyof this.
Like nothing.
We did none of it.
Like, it's like the best laidplans go to hell the second you
make contact with the enemy.
Like it's never going to happen.
And so, but the thing that Ifound really interesting with
OKRs is we had created 24 monthobjectives.
(18:52):
So the three months stints, theability to plan like that,
Dan Balcauski (18:56):
Mm-Hmm.
Jason Ray (18:57):
not possible.
But looking back at the end ofthe 24 months, we gotten to the
same end point, almost exactly.
We want it to be 8 million inrevenue.
We wanted to have, X number ofcustomers.
It's like 450 customers orsomething.
And that was we'd actually gotto the destination.
So I think there's somethingvaluable in writing down and
(19:18):
being really intentional aboutwhat you want to achieve.
Dan Balcauski (19:22):
Hmm.
Jason Ray (19:23):
That said, the faster you go through those phases.
The more quickly you outgrowyour team, and it's one thing if
you can continue to keepleveling up and you're hiring
the next level and the nextlevel and the C level.
I think a lot of mistakes, andit's, I wouldn't even call it a
mistake, honestly.
In order to attract really goodpeople to your startup, you end
(19:44):
up giving them titles that maybethey're not there yet.
They're great people, they wantto grow into that VP title, but
they're going to take a pay cut,they're going to come do it for
equity, so you give them the VPtitle.
And I think, a little bit, youhave to do it, unfortunately,
but that, then it becomes areally steep learning curve.
And I think if I could do itagain, I think there's some
(20:05):
conversations that I would havewith folks that just say, Hey,
look, like I've seen this storybefore, not that this next story
will play out the same way, butI don't want you to, I don't
want the company to outgrow youin this title because of how
fast we grow.
I would rather move you from adirector to a senior director.
(20:27):
Then start you at a VP and then10 million in ARR later, we're
looking at it.
And we're like, we kind of needsomeone who knows how to be a
VP, not someone who's beenworking 80 hours a week to brute
force the business to 11 millionin revenue or 12 million in
revenue.
That's a really, and I'm nottalking like a specific person
per se.
(20:47):
I don't have a specific story inmind, but more just like in a
generality.
And I think those are reallyhard conversations to have
because there are a few ways toattract people to your company.
One piece of advice that I wouldgive folks is don't be stingy
with equity.
Don't, because you'll get to acertain point in your business.
It's either going to be worth alot or it's going to be worth
(21:09):
nothing.
And at the end of the day, if itis worth a lot, you don't want
to be that person where you'vegot a few hundred people at your
business and it didn't changetheir lives.
Like that's a, like that, Ijust, the more and more, and the
further we go, the more we giveout equity to our employees, the
more I think about, like, I'mdoing the math in the back of my
(21:32):
head and saying, Hey, this typeof an outcome, this is the
tectonic shift.
Like, is someone going to beable to put their kids through
school?
Is someone going to be able toput a down payment on their
first house?
Like, how do we make sure thatthis was, Something they look
back on and they're actuallyproud of how hard they worked
because that, that produced ameaningful financial outcome for
them and their family.
(21:53):
So don't, I think a lot offounders, you try to hold it so
close to the best 5 percent morein options, 10 percent more in
options, change a couple hundredpeople's lives.
Dan Balcauski (22:04):
Yeah, for sure.
Well, and so, so there's, it wasa ton in there.
So, you talked about the zero toone story.
So, it's, everyone's wearingevery hat, real sort of every
customer looks different fromone another.
There's starts to be someprocesses, one to five.
You're constantly sort of,change over the team as the
companies, you go from one totwo, you just double the size of
the company, right.
Revenue wise.
Right.
So, so those are big leaps, eventhough they may not, may look,
(22:26):
relatively small in the absolutesense of the relative sense
they're pretty massive.
You hinted at like this thisfive to 15 being quite
different.
And I, I find a lot of founders,Hit that point and, maybe kind
of look it up.
You're like, Oh, once we'rethere, like it's gonna,
everything's gonna be gravy.
But if a lot of founders findthey have so some severe
limitations, they'll preventthem, them scaling, I guess, was
(22:48):
there a particular challengethat paperless parts faced in
that five to 15 million error Rrange?
that was difficult to overcomeMay it was a crucible moment
that, has kind of made you whoyou are today.
Jason Ray (23:00):
I mean, everything breaks in five to 15,
everything.
It just happens.
It's you realize one day thatyou've got 50 times the load
that you ever expected to haveon your servers.
And all of a sudden your site'sknocked over by one big customer
that you closed or you went outand you closed that first big
(23:22):
enterprise deal and you would nobusiness closing a quarter
million dollar deal and theyjust drag you through the mud as
a customer.
And I mean, I'm trying to thinkof, I think the hardest
crucible, and this is more, Ithink, time specific for us
because we were a fortunatecompany that raised money in
2021, but we've been goingthrough this five to fifteens
(23:46):
phase.
And when the, and I think of VCmoney a little bit like
steroids, when the steroidsstop, you really have to
reconcile how much muscle have Iactually built and what can I do
with that?
And that's where you, that'swhere you really get to know
yourself and how gritty you are,because.
We hit that really challengingscale part of the business, this
(24:08):
five to 15, turning overexecutive teams, turning over
employees, having to put newprocesses in place, making the
hard decision that, Hey, wedon't have the right leader at
this piece of the business.
And those are all really likekind of, Oh shit moments for a
founder.
It's like, Oh shit I need toturn over my head of sales.
(24:29):
Or, oh shit, like I don't havethe right people running
marketing or finance.
And all of a sudden it is thislike, it's this very scary
moment where you have to go outand find new people.
Now, something that I was fairlystupid about and it's really
interesting because in the earlydays of starting a business,
(24:51):
cash is a huge constraint,
Dan Balcauski (24:53):
Mm-Hmm.
Jason Ray (24:54):
it's an enormous constraint.
And so you're working reallyhard.
to conserve cash as much as youpossibly can.
Then you get this injection ofventure capital and you go and
you scale up your business.
And when you scale up yourbusiness, you have a higher burn
rate.
And of course, cash is still aconstraint, but it's really time
that you're racing time as aconstraint.
(25:15):
And so you need to use cash Tomeaningfully improve your
trajectory to bring thattimeline in for hitting specific
milestones, right?
If I'm burning a million amonth, if it takes me six months
to get to a really amazingrelease that increases my
revenue, that's six million incash that I've earned.
If it takes me 12 months to getthere, Well shit, now I just
(25:38):
burned 12 million and I'm at thesame point.
So understanding thosemilestones really well.
I think one of the mistakes Imade is I was pretty cheap when
it came to going out andrecruiting executives.
I'm like, ah, we can do this.
We've got networks, we'll findpeople.
And I very much remember sittingdown in the backyard of an
(25:58):
advisor of mine and she lookedat me and she goes, What are you
doing?
She goes, you guys raised 30million and you don't want to
spend a hundred grand to get theright person to come in and run
engineering?
She's like, what's wrong withyou?
She's like, that's, that isstupid.
She's like, a week goes by andyou burn more than that.
(26:19):
Like you've got to get the rightpeople guiding the bus, guiding
the ship, whatever analogy youwant to use.
And I think I was a little pennywise pound foolish there.
And I think that a lot of thatcomes back to, and I would, this
is advice I would give anyentrepreneur out there, if you
raise, Even anything more than10 million, you need to bring in
(26:43):
a really good professional VP offinance or CFO.
Like you absolutely have to,like you can get to a certain
point.
Like I had spreadsheets andmodels and I understand finance
and I'm comfortable with that.
It's very much like knowing howto steer a boat and use
binoculars to navigate.
(27:04):
And maps to navigate, vicehaving a radar.
Bringing in that finance personis your radar on the business.
They are going to break downunit economics at an entirely
different way.
They're going to show you ramptimes on account executives that
you won't realize until you'vealready spent millions of
(27:24):
dollars.
Having folks that are notramping quickly enough and the
process is broken.
Like really, truly understandingthe unit economics of the
business.
It's the first thing our CFO didwhen he came in is he really
modeled out all the differentunit economics and really broke
the business down into chunks.
And I think we would be in adifferent place if I had been
(27:46):
able to recruit him, someone ofhis His experience level
earlier, I mean, I remember webrought in our first VP of
finance, who's still with us.
He's phenomenal, but they triedto turn off the electricity the
day he started.
So I am not I, my stepfatheralways told me you, you chase
(28:07):
accounts receivable, notaccounts payable.
So we had moved into this newoffice and I wasn't thinking
about it, like.
Pay the electricity bills,whatever.
Like they'll send me a bill ifthey want me to pay it.
It turns out they had beensending bills.
So he shows up for thisinterview and this woman is at
the door and she's putting thisneon orange tag on the door.
(28:27):
She's about to turn off theabout to turn off the
electricity.
And I'm like, Oh my God, holdon.
Like, here's my credit cards.
Like I'll, I will pay thesebills right now.
So like he stepped into acomplete.
Founder, brute force led chitshow all the way up to, Six and
a half million in revenue.
I mean, we were doing, we wereusing QuickBooks where, like we
(28:48):
had an outsourced accountingteam that like, I was still
taking pictures of the checks wewere getting for our SaaS
licenses at night, because itwas the only way I could sleep
knowing that we actually hadcash coming in.
I saved them.
I would do like, Oh, one coupleof days, just so I had that
energy boost, so, I mean, hecame in and he had to like
completely clean up thebusiness.
(29:09):
Bringing more of that resourcein, like more of the GNA, more
of the FPNA, financial planningand analysis earlier, not just
to clean up crew to kind of fixall of the duct tape and bubble
gums that you as an entrepreneurput in place.
I think that would have been areally wise decision early days.
You live and you learn, but
Dan Balcauski (29:30):
There's so many breadcrumbs you just dropped.
We could have probably threesessions and we maybe we should
at some point to cover all ofthese interesting areas you just
laid out.
But I mean, just a couple ofthings that I picked up as you
were talking were, first of all,everything breaks you painted
some really good examples ofthose different areas, but
getting a good CFO to reallykind of break out these metrics
(29:51):
so you could run the business asthings start to move.
The whole idea of shiftingconstraints.
I've never heard anyone phraseit that way, but the, I remember
back at, back in businessschool, I dunno if you ever had
to read the goal, but the
Jason Ray (30:05):
oh yeah,
Dan Balcauski (30:05):
of constraints, was it Herbie?
Herbie!
Jason Ray (30:08):
Where's your Herbie.
Dan Balcauski (30:08):
Herbie?
But it's a, that's a veryinteresting it reminded me of
that where it's like, okay,money's no longer constraint,
but it shifts to time.
And that's a totally interestingway to look at it, but then it
shifts how you think aboutthings like paying for, should
we pay a hundred grand to aheadhunter to get us the right
VP, engineering, CTO causeotherwise, yeah, you're, we're
paying all these engineers tosit around and not be effective
(30:29):
otherwise.
they're like, Oh, a hundredthousand is a lot of dollars to
pay a recruiters like, well, sois paying a lot of engineers to
not be as effective as theycould be, otherwise.
So.
Really puts a lot of that in infocus.
You did drop a little bitsomething in there too, though,
which was that you said like,take it VC money's like take it
steroids.
Can you elaborate on that alittle bit more?
(30:50):
Because it it sounded like therewas there board to be elaborated
on.
Jason Ray (30:53):
I think.
So I think it's fantastic.
Like the VC industry isphenomenal in terms of funding
innovation in our country.
It's one of the reasons oureconomy is crushing everybody
right now.
And I look at that though, asyou're seeing round sizes get
incredibly large.
I mean, even in the last decade,call it 15 years, a Series A
(31:18):
used to be like a couple millionbucks.
I mean, we're seeing 10 to 15million series A's.
I mean, that's giving anenormous amount of resource to
an organization that largelyhasn't had a lot of time for the
foundation to cure.
And I think that's, it's, itcauses you to do a lot of very
(31:41):
unnatural things.
So you get less disciplined inwho your customer base is
because you're trying to thenmeet the expectation of 100
percent growth plus.
So do I stay disciplined andtake on customers that all look
the same, even though maybe thatproduces a 80 percent growth
rate?
(32:02):
Or do I take on a lot ofdifferent looking customers,
grow at 120 percent And thenhave a massive tax on your
engineering and productorganization and feel that in
churn 18 months later when youcan't go meet all the
expectations of this diversecustomer base.
Like I think every action has anoutcome and understanding that
(32:25):
you're making decisions thatYou're going to end up paying
the piper on, and if thesteroids stop, so it's one thing
if you go and you raise 10, andthen you raise 20, and then you
raise 50, and then you raise150, and then you raise 250, and
it's like, okay, you can usemoney to boil drinking water,
lighting dollar bills on fireall day, like you can, if you
(32:48):
have enough money to pay forthose mistakes, you can go give
customers rebates.
You can buy an entire engineer,a whole team to focus on some
specific problem.
But when that spigot turns off,if you don't have a solid
foundation, and I think you seethis in a lot of public
companies where they made it topublic, they went through hyper
(33:09):
growth, uniform, unicorn phase,and then they get public.
And then the spigot turns off.
Now it's under a microscope.
We can't just go blow dollars oneverything.
And people start to realize thatpath to solving problems, which
was throwing money at problems,is no longer a path.
(33:29):
But they don't have the musclebuilt to solve problems other
ways.
This is not to say that thosecompanies fail, but you see a
lot of these companies getpublic and their first couple
years are a little rocky.
They're a little like, oh, whathappened?
But then on the other hand, youhave these companies that maybe
they didn't go from zero to 250million in five years or even 10
(33:53):
years.
Maybe they went from zero to 250million in 20 years.
But they've been growing at 40percent durably every single
year.
And that becomes a veryrepeatable, very measurable
process for that business.
That phrase that we're startingto hear more about durable
(34:13):
growth.
That's, I think the counter tohyperscale.
Like it is great to grow at ahundred percent for the first
five years and then get kickedin the teeth and grow at 20%.
I think that's great.
I would rather grow at 40percent a year forever.
Dan Balcauski (34:29):
well, you hinted at some things there, I love
everything you just said, but, Ithink the problem, has been
right.
Like we saw those, tech crunch,headlines of, every unicorn
getting minted.
These this, 20 million Series A,a hundred million, whatever
Series B I mean, a hundredmillion actually 20, 21, 22,
that was even small.
(34:49):
It would be like 200 millionSeries B.
I'm curious cause you, I mean,you imbibed of the steroids
yourself, like, Has your, Kindof definition of the kind of
company you're trying to buildand your metrics of success
changed over time.
Like, is that, and how do youthink about your trajectory?
Jason Ray (35:08):
I think the main change is a little more
patience.
I mean, I remember sitting therein the early days and be like,
man, if we're not a hundredmillion in the next four years,
like what do we do?
Like we didn't achieve anything.
And those numbers are like, notreal because you can't even
fathom what it would be like.
And this is where a really goodCFO comes into play because a
(35:29):
really good CFO would say, okay,you sell 35, 000 customers.
How many do you need to get to ahundred million?
Let's think about this.
Now let's look at customeracquisition costs.
Now let's look at how long thatpayback period is.
Now let's look at all theinfrastructure we need.
If you get someone who reallythinks through it, whereas a lot
of entrepreneurs, I can speakfor myself, really.
I'm an optimist.
(35:50):
So I like, I see a target.
I'm like, yes, we're going to godo that.
We, so we were very fortunate tofind a fantastic VC that
partnered with us, OpenView.
And they gave us 30 million in2021.
And we raised at the absoluteheight of the market.
And then we had to really gogrow into that valuation,
especially because While thecompany was growing, the
(36:13):
valuations were decliningprecipitously.
And so I think we've been ableto do that, and I don't think we
would be where we were, or aretoday, without that investment.
But I do think that, It, thatbig of a check, a 30 million
check causes you to do somethings that are pretty inorganic
(36:34):
and we were chasing that 100million Series C.
I mean, we thought we wouldraise a hundred million in, call
it like March, April, May of 22.
So seven, eight, nine monthsafter our Series B, we just, we
thought that would be thecadence.
So we'd planned for that.
So, I mean, we hired, we grewthe company to 170 people.
(36:58):
Because we knew that if we weregoing to have this injection of
cash, we need to be able toonboard all the customers.
We needed to be able to supportthem.
We needed to have the engineersto build all the features and
functionality that they neededbecause we had so many different
looking customers.
And it's the second that hundredmillion wasn't there.
And maybe I just, I can't tell agood enough story, whatever it
(37:20):
is, but we weren't able to raisethat in 22.
Like that's just rounds likethat weren't happening.
And everybody was like, no, wewant profitable growth.
We want, go just flip a switchand go to a different mode, like
get, take your businessprofitable.
And it's like, guys, no, like wejust, we literally had this
thing in motion in a direction.
(37:41):
And it was really painful.
I mean, we went through a riff,which was really painful.
I don't wish that on anybody,especially because.
If you do it the right way,you'll look the people in the
eye that you're saying goodbyeto and you'll look your team in
the eye and you'll takeresponsibility for it.
And that sits with you for along time.
Like you'd never want to be thatfounder that asks people to come
(38:02):
get on board and work with youto build something and then have
them have to exit before beforethe time is right.
Or, they're doing a good job,but you just didn't build a
scalable org.
Dan Balcauski (38:14):
Yeah, well, 22 was a sobering time for a lot of
folks in the B2B software world,both venture capital and
entrepreneurs and employeesalike and has we've been in that
hangover mode from drinking toomuch of the punch at the party
for, I.
for too long, so, sorry, ithappened to you, I, if a
constellation is, of anything,that's, there was shared misery
all around but but I did hear,there, I heard some really
(38:37):
interesting things, in sort ofthe, your entirety of your
answer there, though, which isalso and a couple points, this
has popped out to me in ourconversation today, which is, I
think you said something alongthe lines of by nature, I'm
optimistic.
It was really helpful to sitdown with that CFO to really
kind of sober me up and show mewhat those numbers mean.
And, with your Your advisor,who's telling you about, paying
(38:58):
the money to the executivesearch firm?
I heard, it's often the mostdifficult thing is sort of
getting outta your own way andsounds like you found, finding
those partners that can helpcheck the instincts that, what's
the old Marshall Goldsmith, whatgot you here won't get you
there.
Right?
Like, what is that?
What is that grit, thatdetermination, that optimism,
that gets you zero to one.
It could blow up in your faceand if you're that five to 50.
(39:19):
Team and Getting those partnersand other people to sort of
check your first instinct,right?
Maybe you know it in the back ofyour mind, but it's not your
first sort of go-to play asyou're going along.
Jason, I could talk to you allday and I would love to have you
back on to co to touch on someof these other threads.
But you know, I wanna berespectful of your, and the
audience this time.
So I'd wanna wrap us up withsome some rapid closeout
questions.
(39:39):
Is that okay?
Jason Ray (39:40):
Sounds great.
Dan Balcauski (39:41):
Awesome.
Well, look, we were talkingabout paperless parts and sort
of, what success meant there.
How do you define sort of yoursuccess today?
What does success mean to youpersonally?
Jason Ray (39:50):
It means having had a tremendous positive impact on
our customers and then also onour employees.
I mean, I think if every personthat works at Paperless Parts in
a decade or two looks back andsays, that was the best company
I ever worked for, we were doingsomething really meaningful, I
learned a lot, I'm better offfor it financially.
(40:11):
I think that'll be success.
No question about it.
Dan Balcauski (40:14):
Impact on your customers or your employees?
I absolutely love that.
Look no one of any success getsthere on their own.
I think you are successful.
Has there been a close mentor, aleader who has really helped you
on your journey?
Jason Ray (40:25):
Yeah, I would say Jay Jacobs my co founder.
I mean, he's been, he's a cheatcode.
No question about it.
He has helped us every step ofthe way.
Even, I mean, even conversationslike a couple of days ago, he's
like kicking my ass on AI.
And he's like, come on, like,you got to start thinking about
(40:46):
this.
And I'm like, Jay, like, I'mtrying to hit Q4.
And he's like, no.
You gotta be thinking aboutthis, and this all the time.
He's like, I'm pushing youbecause you got to do it.
And having people like that wewouldn't be here if it weren't
for Jay.
No question about it.
Dan Balcauski (41:00):
And is Jay on the the technical side of the house.
Jason Ray (41:03):
Jay is actually, came from being a customer.
He was running one of theworld's largest rapid
prototyping businesses.
And he ended up selling thatbusiness to a large competitor.
Dan Balcauski (41:13):
And he's the one kicking you in the tail on AI.
Good for him.
Jason Ray (41:17):
Always be learning, right?
Always be learning.
Dan Balcauski (41:20):
Well, well, Jay, we appreciate your persistent
efforts.
I'm sure it's your work hasnever done.
Look if you could, if I give youa billboard, you could put any
advice on there for other B2BSass CEOs trying to scale their
companies.
What would it say?
Jason Ray (41:34):
I was thinking about this one.
Probably don't give up.
I think I think it, a lot oftimes the breakthroughs happen
right in the final moments.
Like, you look at SpaceX justcatching a rocket midair.
I mean, that company would havebeen out of business if the
fourth rocket didn't launch.
They'd given up after the thirdtime it exploded.
(41:58):
You wouldn't be, like, the worldwould be a totally different
place.
So, I don't know, we've pushedall the way to a day.
of cash left in the bank beforeneeding to make a payroll that
would have said goodbye to thecompany.
Stay gritty and persistent.
The breakthroughs, they'rethere.
Dan Balcauski (42:16):
I agree that Elon moment was incredibly
inspirational.
Applause to that whole team.
And don't give up.
I love that positive way to endthe episode.
Jason, if I've absolutely lovedthis conversation, if our
listeners wanna learn more aboutyou, about paperless parts where
can they follow you on theinternet, anywhere you wanna
point him to?
Jason Ray (42:32):
LinkedIn is the best place.
Please feel free to shoot me aconnection on LinkedIn.
Follow Paperless Parts.
If there's something I can do tohelp you, please don't hesitate
to reach out.
It takes a village.
Dan Balcauski (42:42):
Well, Jason, I will put those links in the show
notes for our listeners.
Everyone that wraps up thisepisode of Sask Scaling Secrets.
Thank you, Jason, for sharinghis journey, insights, and
invaluable tips for ourlisteners.
If you found this conversationas a light anxiety to remember,
subscribe so you don't miss outon future episodes.
Thank you, Jason.
Jason Ray (42:58):
Thanks so much, Dan.
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories from the leaders of the
best scale at B2B SaaScompanies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I'm excited to speak withJason Ray.
Jason is the co-founder and CEOof Paperless Parts a Boston
based SaaS company leading thedigital transformation for
custom part manufacturers.
A Navy veteran with a passionfor modernizing traditional
(00:41):
industries, Jason has guidedPaperless Parts from startup to
scale up, successfullynavigating the challenges of
rapid growth along the way.
Let's dive in.
Welcome, Jason, to SaaS ScalingSecrets.
Jason Ray (00:51):
Dan, thanks so much.
I really appreciate you havingme.
Dan Balcauski (00:54):
I am Very excited for our conversation today.
I'm sure our listeners will geta lot of value out of it.
Jason, I gave you the audience alittle bit of a taste of your
background in the intro, but forthose folks who haven't been
following your journey closely,can you just tell us a little
bit about your journey in theSaaS world?
Jason Ray (01:09):
Yeah, I, thank you.
Appreciate the opportunity.
I grew up in the Navy, so Ispent seven years on active
duty, supply corps focused onlogistics, the business end of
the Navy.
When I left active duty, I hadalso finished a MBA at Babson
and decided to go into thesearch fund route.
I figured, maybe I can go buyone of these traditional
(01:30):
businesses.
Be a part of the defenseindustrial base really solve
some of the problems that I sawwhile I was on active duty.
And at the end of the day, Irealized how hard and how
challenging are our industry isto survive in, the manufacturing
industry is very unforgiving.
It's run by entrepreneurs thathave an enormous amount of
(01:52):
technical aptitude for whatthey're doing.
And that really is the firsttime I started to think about
software.
I witnessed these businessesthat were being run by sheer
brute force.
You had filing cabinets filledwith technical drawings.
You had Excel spreadsheetsshaved, saved in all kinds of
different share drivestructures.
And I mean, it was just aunbelievably complex business to
(02:16):
successfully navigate.
And I remember explaining to myco founder, Jay Jacobs at the
time, I said, Jay, I'm nevergoing to be able to buy a
machine shop and run one ofthese businesses successfully.
Like that would be truearrogance to think that I can
replace someone who's beenrunning the business for 30
years.
And all of a sudden I'm going tostep in with my shiny new MBA.
(02:39):
And all of a sudden I'm going tomake that business as successful
or more successful.
I just, I didn't see ithappening.
Right.
And so when I went to walk awayfrom it, Jay was the one who
said, you should build asoftware company.
There's something here.
Manufacturers need good softwareand there's no one going after
this problem right now.
(03:00):
Why don't you write a businessplan for that?
And that's how I got into SaaS.
Dan Balcauski (03:04):
That's a fascinating story.
So, and for folks who maybearen't aware, could you just
give us the very high level onwhat a search fund is?
I it's become pretty hot in theNBA world, but I think
relatively recently, so maybeeveryone's not quite aware.
Jason Ray (03:17):
Yeah, a search fund model is a model where an MBA
usually goes out and searchesfor a business to buy.
And they either do that withcommitted dollars where
investors will say, Hey, we likeyour pedigree.
We think you've got a good planfor going into a specific
industry, buying a business,growing that business.
(03:38):
Usually you're buying a businessthat has Revenue and profits.
So it's less risky.
And a lot of times MBAs, theywant to be entrepreneurs, but
they don't really have aparticular idea to start the
next new thing.
You're also seeing a prettysignificant change in
generational ownership andwealth in this country.
(03:59):
And so what's happening there isyou're seeing this industry, our
manufacturing industry, butyou're seeing a lot of
industries turn over.
So that makes it a reallyattractive search fund model.
The searcher gets equity in thebusiness.
They earn that through a lot ofsweat equity of searching for a
business to buy.
Some people will search for upto two years before they end up
(04:21):
buying a business.
I spent about 11 months and thenrealized, how much I didn't know
about the business I wanted totry to buy.
So I was able to, I was able toreverse course pretty quickly.
Dan Balcauski (04:33):
Got it.
So, so if I just tie togetherthose two pieces of the story so
basically you are in this searchmodel looking to go buy one of
these smaller, manufacturingcompanies, and as you're in that
process of evaluating thebusinesses, this is when you
sort of discover this problem ofrunning these type of shops.
Jason Ray (04:54):
Yeah.
And we didn't even really have agreat problem definition when we
first started.
We initially thought the problemwas a lack of technology to
connect.
The buyers and the suppliers ofmanufactured products like very
high level statement and circa2016 marketplaces were super
sexy.
(05:14):
So we're like, let's go build amarketplace.
We'll go set up a marketplacethat applies a bunch of cool
technology and makes it reallyeasy for.
A buyer of an industrialcomponent or assembly to come in
and find new sources of supplyand transact with those sources
of supply very easily.
And it all sounded really goodon paper.
(05:35):
And we raced after this.
I mean, we spent eight monthsbuilding the coolest marketplace
in the world.
And those moments in your lifewhere you expect it to be
fireworks, like you are justlike, the anticipation is so
high.
We had spent months preparingfor this launch.
My co founder Scott Sawyer and Isitting there and like, we click
(05:58):
the button to turn it on.
And it was like, it was therewas soon like fireworks and a
party popper.
It was kind of like, like, waita second.
Like we had beers.
It was, we were ready to go.
Like we're so pumped.
And I remember sitting there forlike, Like an hour before
someone actually came to thesite.
And mind you, we had toldthousands of people that the
(06:19):
site was launching.
So, but we had one and Iremember him looking at me and
he's like, there's one, Oh myGod, there's one.
And I mean, for the next coupleof months it kind of puttered
along, we had dozens oftransactions.
We had initial, initial peoplecoming in, telling us that it
was really cool.
But at the end of the day, itwasn't.
(06:42):
It wasn't something that wasever really going to scale and
it wasn't actually going tosolve the problem we wanted to
solve.
And so stepping back from thatwe were going to put the whole
business to bed.
We told Jay, our co founder, wesaid, Hey, this isn't going to
work.
We'll give you what money wehave left back.
And we'll all go on our way.
(07:02):
And Jay is, and this is Jay to acore, since we've started this
business, has always been theperson that's said, don't give
up, keep pushing go ask harderquestions, go figure out where
the problem is, go solve it,I've got your back.
And he always has, and I thinkthat's great.
A little bit of like, I thinkwe've often gotten to cheat a
(07:23):
little bit.
Cause not everybody has a personlike that has such conviction
that what you were doing isnecessary for the world and has
experience in the industry whereyou were trying to solve
problems.
And so Jay was the one whopushed us to go out and try to
understand what's the realproblem that we need to solve.
And everyone that we talked toquoting, quoting, quoting,
(07:47):
quoting, it is hard to quote.
It's risky to quote.
I don't trust anybody to quote.
I'm an owner.
I'm not scaling, but I'm goingto quote because I won't trust
another person in my shop to notscrew this up.
And I think if there's any onething we did right at Paperless
Parts in the last eight years,it was identify something that
was actually a real painfulproblem.
(08:12):
a, not a problem that's, a niceto have.
I've heard it explained as, areyou a vitamin?
Are you a painkiller?
Are you oxygen?
And I think we're somewhere inthat, like.
painkiller, oxygen category.
Probably painkiller killer whenyou first come, try to buy
paperless parts, more oxygen.
Once you've really started usingit and you realize that there's
(08:35):
a completely different way torun your business.
But that's, I think that'sprobably the thing that we've
done that I would point
Dan Balcauski (08:42):
Well, I, I wanna double click on that because I
think that's a great point.
So, you first of all, I thinkthere's there's some goal to be
had even in the disappointmentof the party popper versus the
fireworks.
I once had a business coach whenI was being a little bit
hesitant about pivoting in acertain direction, say, we'll,
go do it.
Because if you failed, no onewill even notice because it's
(09:02):
not gonna be relevant to them.
So, so I think that there's somegood news there for any
entrepreneur's.
Like, yeah, don't worry aboutyour big launch.
Don't worry about going in thisdirection.
Cause it's not relevant.
Like nobody will even rememberor care.
So, no one will even see yourfailure.
I think we have this big ideasome, somewhere we got in our
heads that everyone's looking atus and waiting for us to do
something and actuallyeveryone's just busy kinda
(09:23):
living their own lives so Ithink there's even in those
moments there's a lesson of Ofmaturity and gold to be had but
i wanna double click because, inthat arc that you just painted,
there was hey we were reallyfocused on this problem we went
a whole hog on it for 18 months,we launched, to, little fanfare.
And then we, we found thisproblem around quoting that was
(09:43):
super, painful and valuable.
What changed, like, what wereyou, what was the team doing
there that allowed you to sortof like in that new world, like,
did, I mean, was it just likepure luck you just stumbled on
this or was there a method thatyou were able to sort of figure
out what problems that peoplewere actually, willing, see,
actively seeking a solution for?
Jason Ray (10:03):
think.
When we went to turn themarketplace off, cause that was
decided.
We're like, we're going to turnthis thing off.
It's not working.
We went and talked to a lot ofthe manufacturers to let them
know.
We wanted to thank them forbeing a part of it.
We'd spent a lot of time withthem.
And the vast majority of themsaid, yeah, great idea.
Wish it was going to work outbetter.
(10:24):
But there were about a half adozen folks that said, wait a
second, you can't turn this off.
And that, this is, I think,where the luck came into play.
So these folks, as manymanufacturers are, they are
super they have high level ofingenuity.
I mean, they really figure outhow to solve problems, but they
do it in a little bit of aroundabout way.
(10:45):
And so these manufacturers thatwe had talked to that said, we
can't turn the marketplace off,they were signing in to the
buyer side of the marketplace,Loading part files.
and looking up their own pricingand they were using the pricing
engine we had built as a quotingtool.
(11:05):
They were copying and pastingthe prices into word documents
and sending quotes out.
I kid you not, like sheer luck.
We never would have seen this indata.
And I think that there's alesson there.
A lot of people think that dataalone can tell the story.
One of the core values that wehave at Paperless Parts is that
relationships matter.
I love the concepts of AI and Ilove using technology to solve
(11:29):
problems.
And honestly, Sometimes you justneed to have a conversation with
people.
You just need to talk to them.
Like the data is only a piece ofthe story.
And I'm so glad that Jay pushedus to go out and interview all
these companies.
Cause if we didn't talk to them,we never would have known.
We would have just turned thething off.
We would have gone away.
(11:49):
They probably never would havereached out.
Our emails would have been goneby that time.
And it would have been over.
And so I, I really encouragepeople to just, there's a lot to
be said for picking up thephone.
Dan Balcauski (12:00):
So you were able to figure out this sort of hack
that they were using your systemto use where they were like,
well, hold up.
Like, I'm actually still kind ofusing this other thing, even
though it wasn't something thatyou had intentionally built.
And from there was the seed ofkind of this future direction.
Jason Ray (12:17):
I remember a specific quote where one of the guys we
got on the phone, he says, youcan't turn this off.
And we said, why?
And he said, well, yourmarketplace is total shit.
He's like, but the pricingengine, he's like, now there's
something there.
If you guys would just get smartand go build a quoting tool.
I think you'd really havesomething that we'd be willing
to pay a lot of money for.
(12:39):
And I just I remember theconversation was like, yeah, it
was yesterday.
Cause it was like light bulbsgoing off and we raced.
I mean, we spent the next threemonths hacking together like the
most disgusting looking quotingtool around this really cool
technology that we had foranalyzing 3d CAD models and
drawings and they used it.
(13:01):
I mean, that's another big pieceof this.
I've always been.
And probably still am today.
And this is not a knock on ourengineering team, our design
team, but I think founders arealways embarrassed of their
product.
I think that's just a truestatement.
You're always going to see thewarts.
You're always going to, ifyou're close to your product,
you'll know the things that youwish you had time to go fix or
(13:21):
put polish on, and a lot ofpeople end up waiting too long
to like get it out into thewild.
And so we had paying customers.
They were paying us to keep themarketplace turned on and we had
to get them this gross quotingtool.
And so we raced and we got itout there and we got a lot of
(13:41):
feedback.
I mean, it was it was colorfulfeedback, but I think it made us
better a lot faster and it tookus a while to find product
market fit, I think.
I think there's this expectationthat has been cultivated in like
the VC railroad tracks of howfast you should be able to do
certain things.
And I've, I have a friend whoalways says, don't should on
(14:04):
yourself.
Like there is no real should,like it's, yeah, maybe that's
worth looking at benchmarks.
It's worth understanding ifyou're approaching something the
right way, but differentindustries are really, really
hard.
Dan Balcauski (14:17):
I love that.
So, so ship it, even if it'sgross and don't shit on
yourself.
I think we could both livebetter lives if we took those
pieces of advices under ourwing.
Well you and I before we turnedon the recorder had a, had an
interesting conversation, thisvery What you've painted is a
very interesting story, of sortof that, zero to one journey of
finding product market fit andfinding that thing people are
willing to pay for.
(14:37):
But I think you had a reallyinteresting perspective on how
sort of, look, every CEO, everycompany faces challenges along
the way, but those challengescan look significantly
different, the zero to onejourney versus the one to 5
million.
In your mind, how do thosedifferent revenue milestones,
how do the challenges lookdifferent as you're trying to
grow and scale the company?
Jason Ray (14:56):
Yeah, I think a mentor of mine told me that
depending on your growth rate asa CEO, you'll be trying to
reinvent yourself every sixmonths because what you are to
the business needs to evolve andchange as the business grows and
gets more professional and youbring in different teams.
And I kind of, I chunk it up, atleast our journey, and it may be
(15:18):
different for other people.
There are companies that turntheir software on and they're 20
million in a day.
That wasn't us.
It took a while.
We had very distinct phases inthe zero to a million phase, in
the million to five millionphase.
Five to 15 was particularlychallenging.
And now after 15, it's not thatit's gotten easier.
(15:40):
I think the foundation is cured,like we've laid a lot of
foundation.
We have a lot of processes.
We have a lot of people rowingin the same direction.
And I think the team that youneed and the personalities of
the team you need changes prettydramatically based on what stage
you're in.
That zero to one, you areblazing new trail.
(16:02):
Like you need to be okay withrejection and failure.
And like, it is also doingthings that are completely
unnatural, brute forcesolutions, getting on airplanes,
implementing customers thatdon't look like any of your
other customers.
Cause you're trying to getrevenue.
It just, it's a completelydifferent vibe.
(16:22):
And that one to five, I think,is largely, you're starting to
build some processes and systemsaround it.
But I think the biggest thing toprove there, and it all depends,
these are, like I said, ourphases, we sell, 35K ACBs B to
B, SaaS, it might be completelydifferent for enterprise
companies, but what I found isthat one to five phase was a
(16:45):
critical transition of founderled sales.
So I'm the only person thatsells the software.
I'm the only person that knowshow to sell it, communicate the
value propositions.
It's almost, it's veryevangelical selling.
Of course I love it.
So I'm going to, I'm going todemo the hell out of it every
single day.
And I was doing five demos a dayat least from zero to one.
(17:07):
I mean, it was.
I can see it in my sleep.
It's crazy.
It's like an extension of yourbody.
But then going one to five,finding people that can do that,
that aren't founders.
It's such a transition in thebusiness.
Like you get that first personwho's able to go out and
replicate selling.
It's a total game changer.
(17:29):
And you get a small handful ofpeople that are able to do it.
And then you have to try tosystematize it.
And I think you still get awaywith a lot of brute force in the
one to five realm.
And depending on how fast yougrow there the biggest the
biggest challenge you can getinto is the people that are
right for one to five.
(17:49):
They're comfortable with bruteforce.
They're comfortable withuncertainty, but they kept maybe
a little bit of structure.
They're not necessarily thepeople that are going to go and
grow into those executives thatbuild.
Repeatable, durable processesthat have KPIs that they measure
to.
And, like, I've always found itso funny and it's a worthwhile
(18:11):
exercise regardless of whetheryou do it well or not, but OKRs.
I mean, we talk about OKRs,MBAs, it's like, three letter
acronyms, they're our favoritething.
And I'll tell you what, we wouldgo and spend hours in a room
working on OKRs and get so, so,so granular.
And then we would come backthree months later and we'd be
(18:32):
like, Oh yeah, we didn't do anyof this.
Like nothing.
We did none of it.
Like, it's like the best laidplans go to hell the second you
make contact with the enemy.
Like it's never going to happen.
And so, but the thing that Ifound really interesting with
OKRs is we had created 24 monthobjectives.
(18:52):
So the three months stints, theability to plan like that,
Dan Balcauski (18:56):
Mm-Hmm.
Jason Ray (18:57):
not possible.
But looking back at the end ofthe 24 months, we gotten to the
same end point, almost exactly.
We want it to be 8 million inrevenue.
We wanted to have, X number ofcustomers.
It's like 450 customers orsomething.
And that was we'd actually gotto the destination.
So I think there's somethingvaluable in writing down and
(19:18):
being really intentional aboutwhat you want to achieve.
Dan Balcauski (19:22):
Hmm.
Jason Ray (19:23):
That said, the faster you go through those phases.
The more quickly you outgrowyour team, and it's one thing if
you can continue to keepleveling up and you're hiring
the next level and the nextlevel and the C level.
I think a lot of mistakes, andit's, I wouldn't even call it a
mistake, honestly.
In order to attract really goodpeople to your startup, you end
(19:44):
up giving them titles that maybethey're not there yet.
They're great people, they wantto grow into that VP title, but
they're going to take a pay cut,they're going to come do it for
equity, so you give them the VPtitle.
And I think, a little bit, youhave to do it, unfortunately,
but that, then it becomes areally steep learning curve.
And I think if I could do itagain, I think there's some
(20:05):
conversations that I would havewith folks that just say, Hey,
look, like I've seen this storybefore, not that this next story
will play out the same way, butI don't want you to, I don't
want the company to outgrow youin this title because of how
fast we grow.
I would rather move you from adirector to a senior director.
(20:27):
Then start you at a VP and then10 million in ARR later, we're
looking at it.
And we're like, we kind of needsomeone who knows how to be a
VP, not someone who's beenworking 80 hours a week to brute
force the business to 11 millionin revenue or 12 million in
revenue.
That's a really, and I'm nottalking like a specific person
per se.
(20:47):
I don't have a specific story inmind, but more just like in a
generality.
And I think those are reallyhard conversations to have
because there are a few ways toattract people to your company.
One piece of advice that I wouldgive folks is don't be stingy
with equity.
Don't, because you'll get to acertain point in your business.
It's either going to be worth alot or it's going to be worth
(21:09):
nothing.
And at the end of the day, if itis worth a lot, you don't want
to be that person where you'vegot a few hundred people at your
business and it didn't changetheir lives.
Like that's a, like that, Ijust, the more and more, and the
further we go, the more we giveout equity to our employees, the
more I think about, like, I'mdoing the math in the back of my
(21:32):
head and saying, Hey, this typeof an outcome, this is the
tectonic shift.
Like, is someone going to beable to put their kids through
school?
Is someone going to be able toput a down payment on their
first house?
Like, how do we make sure thatthis was, Something they look
back on and they're actuallyproud of how hard they worked
because that, that produced ameaningful financial outcome for
them and their family.
(21:53):
So don't, I think a lot offounders, you try to hold it so
close to the best 5 percent morein options, 10 percent more in
options, change a couple hundredpeople's lives.
Dan Balcauski (22:04):
Yeah, for sure.
Well, and so, so there's, it wasa ton in there.
So, you talked about the zero toone story.
So, it's, everyone's wearingevery hat, real sort of every
customer looks different fromone another.
There's starts to be someprocesses, one to five.
You're constantly sort of,change over the team as the
companies, you go from one totwo, you just double the size of
the company, right.
Revenue wise.
Right.
So, so those are big leaps, eventhough they may not, may look,
(22:26):
relatively small in the absolutesense of the relative sense
they're pretty massive.
You hinted at like this thisfive to 15 being quite
different.
And I, I find a lot of founders,Hit that point and, maybe kind
of look it up.
You're like, Oh, once we'rethere, like it's gonna,
everything's gonna be gravy.
But if a lot of founders findthey have so some severe
limitations, they'll preventthem, them scaling, I guess, was
(22:48):
there a particular challengethat paperless parts faced in
that five to 15 million error Rrange?
that was difficult to overcomeMay it was a crucible moment
that, has kind of made you whoyou are today.
Jason Ray (23:00):
I mean, everything breaks in five to 15,
everything.
It just happens.
It's you realize one day thatyou've got 50 times the load
that you ever expected to haveon your servers.
And all of a sudden your site'sknocked over by one big customer
that you closed or you went outand you closed that first big
(23:22):
enterprise deal and you would nobusiness closing a quarter
million dollar deal and theyjust drag you through the mud as
a customer.
And I mean, I'm trying to thinkof, I think the hardest
crucible, and this is more, Ithink, time specific for us
because we were a fortunatecompany that raised money in
2021, but we've been goingthrough this five to fifteens
(23:46):
phase.
And when the, and I think of VCmoney a little bit like
steroids, when the steroidsstop, you really have to
reconcile how much muscle have Iactually built and what can I do
with that?
And that's where you, that'swhere you really get to know
yourself and how gritty you are,because.
We hit that really challengingscale part of the business, this
(24:08):
five to 15, turning overexecutive teams, turning over
employees, having to put newprocesses in place, making the
hard decision that, Hey, wedon't have the right leader at
this piece of the business.
And those are all really likekind of, Oh shit moments for a
founder.
It's like, Oh shit I need toturn over my head of sales.
(24:29):
Or, oh shit, like I don't havethe right people running
marketing or finance.
And all of a sudden it is thislike, it's this very scary
moment where you have to go outand find new people.
Now, something that I was fairlystupid about and it's really
interesting because in the earlydays of starting a business,
(24:51):
cash is a huge constraint,
Dan Balcauski (24:53):
Mm-Hmm.
Jason Ray (24:54):
it's an enormous constraint.
And so you're working reallyhard.
to conserve cash as much as youpossibly can.
Then you get this injection ofventure capital and you go and
you scale up your business.
And when you scale up yourbusiness, you have a higher burn
rate.
And of course, cash is still aconstraint, but it's really time
that you're racing time as aconstraint.
(25:15):
And so you need to use cash Tomeaningfully improve your
trajectory to bring thattimeline in for hitting specific
milestones, right?
If I'm burning a million amonth, if it takes me six months
to get to a really amazingrelease that increases my
revenue, that's six million incash that I've earned.
If it takes me 12 months to getthere, Well shit, now I just
(25:38):
burned 12 million and I'm at thesame point.
So understanding thosemilestones really well.
I think one of the mistakes Imade is I was pretty cheap when
it came to going out andrecruiting executives.
I'm like, ah, we can do this.
We've got networks, we'll findpeople.
And I very much remember sittingdown in the backyard of an
(25:58):
advisor of mine and she lookedat me and she goes, What are you
doing?
She goes, you guys raised 30million and you don't want to
spend a hundred grand to get theright person to come in and run
engineering?
She's like, what's wrong withyou?
She's like, that's, that isstupid.
She's like, a week goes by andyou burn more than that.
(26:19):
Like you've got to get the rightpeople guiding the bus, guiding
the ship, whatever analogy youwant to use.
And I think I was a little pennywise pound foolish there.
And I think that a lot of thatcomes back to, and I would, this
is advice I would give anyentrepreneur out there, if you
raise, Even anything more than10 million, you need to bring in
(26:43):
a really good professional VP offinance or CFO.
Like you absolutely have to,like you can get to a certain
point.
Like I had spreadsheets andmodels and I understand finance
and I'm comfortable with that.
It's very much like knowing howto steer a boat and use
binoculars to navigate.
(27:04):
And maps to navigate, vicehaving a radar.
Bringing in that finance personis your radar on the business.
They are going to break downunit economics at an entirely
different way.
They're going to show you ramptimes on account executives that
you won't realize until you'vealready spent millions of
(27:24):
dollars.
Having folks that are notramping quickly enough and the
process is broken.
Like really, truly understandingthe unit economics of the
business.
It's the first thing our CFO didwhen he came in is he really
modeled out all the differentunit economics and really broke
the business down into chunks.
And I think we would be in adifferent place if I had been
(27:46):
able to recruit him, someone ofhis His experience level
earlier, I mean, I remember webrought in our first VP of
finance, who's still with us.
He's phenomenal, but they triedto turn off the electricity the
day he started.
So I am not I, my stepfatheralways told me you, you chase
(28:07):
accounts receivable, notaccounts payable.
So we had moved into this newoffice and I wasn't thinking
about it, like.
Pay the electricity bills,whatever.
Like they'll send me a bill ifthey want me to pay it.
It turns out they had beensending bills.
So he shows up for thisinterview and this woman is at
the door and she's putting thisneon orange tag on the door.
(28:27):
She's about to turn off theabout to turn off the
electricity.
And I'm like, Oh my God, holdon.
Like, here's my credit cards.
Like I'll, I will pay thesebills right now.
So like he stepped into acomplete.
Founder, brute force led chitshow all the way up to, Six and
a half million in revenue.
I mean, we were doing, we wereusing QuickBooks where, like we
(28:48):
had an outsourced accountingteam that like, I was still
taking pictures of the checks wewere getting for our SaaS
licenses at night, because itwas the only way I could sleep
knowing that we actually hadcash coming in.
I saved them.
I would do like, Oh, one coupleof days, just so I had that
energy boost, so, I mean, hecame in and he had to like
completely clean up thebusiness.
(29:09):
Bringing more of that resourcein, like more of the GNA, more
of the FPNA, financial planningand analysis earlier, not just
to clean up crew to kind of fixall of the duct tape and bubble
gums that you as an entrepreneurput in place.
I think that would have been areally wise decision early days.
You live and you learn, but
Dan Balcauski (29:30):
There's so many breadcrumbs you just dropped.
We could have probably threesessions and we maybe we should
at some point to cover all ofthese interesting areas you just
laid out.
But I mean, just a couple ofthings that I picked up as you
were talking were, first of all,everything breaks you painted
some really good examples ofthose different areas, but
getting a good CFO to reallykind of break out these metrics
(29:51):
so you could run the business asthings start to move.
The whole idea of shiftingconstraints.
I've never heard anyone phraseit that way, but the, I remember
back at, back in businessschool, I dunno if you ever had
to read the goal, but the
Jason Ray (30:05):
oh yeah,
Dan Balcauski (30:05):
of constraints, was it Herbie?
Herbie!
Jason Ray (30:08):
Where's your Herbie.
Dan Balcauski (30:08):
Herbie?
But it's a, that's a veryinteresting it reminded me of
that where it's like, okay,money's no longer constraint,
but it shifts to time.
And that's a totally interestingway to look at it, but then it
shifts how you think aboutthings like paying for, should
we pay a hundred grand to aheadhunter to get us the right
VP, engineering, CTO causeotherwise, yeah, you're, we're
paying all these engineers tosit around and not be effective
(30:29):
otherwise.
they're like, Oh, a hundredthousand is a lot of dollars to
pay a recruiters like, well, sois paying a lot of engineers to
not be as effective as theycould be, otherwise.
So.
Really puts a lot of that in infocus.
You did drop a little bitsomething in there too, though,
which was that you said like,take it VC money's like take it
steroids.
Can you elaborate on that alittle bit more?
(30:50):
Because it it sounded like therewas there board to be elaborated
on.
Jason Ray (30:53):
I think.
So I think it's fantastic.
Like the VC industry isphenomenal in terms of funding
innovation in our country.
It's one of the reasons oureconomy is crushing everybody
right now.
And I look at that though, asyou're seeing round sizes get
incredibly large.
I mean, even in the last decade,call it 15 years, a Series A
(31:18):
used to be like a couple millionbucks.
I mean, we're seeing 10 to 15million series A's.
I mean, that's giving anenormous amount of resource to
an organization that largelyhasn't had a lot of time for the
foundation to cure.
And I think that's, it's, itcauses you to do a lot of very
(31:41):
unnatural things.
So you get less disciplined inwho your customer base is
because you're trying to thenmeet the expectation of 100
percent growth plus.
So do I stay disciplined andtake on customers that all look
the same, even though maybe thatproduces a 80 percent growth
rate?
(32:02):
Or do I take on a lot ofdifferent looking customers,
grow at 120 percent And thenhave a massive tax on your
engineering and productorganization and feel that in
churn 18 months later when youcan't go meet all the
expectations of this diversecustomer base.
Like I think every action has anoutcome and understanding that
(32:25):
you're making decisions thatYou're going to end up paying
the piper on, and if thesteroids stop, so it's one thing
if you go and you raise 10, andthen you raise 20, and then you
raise 50, and then you raise150, and then you raise 250, and
it's like, okay, you can usemoney to boil drinking water,
lighting dollar bills on fireall day, like you can, if you
(32:48):
have enough money to pay forthose mistakes, you can go give
customers rebates.
You can buy an entire engineer,a whole team to focus on some
specific problem.
But when that spigot turns off,if you don't have a solid
foundation, and I think you seethis in a lot of public
companies where they made it topublic, they went through hyper
(33:09):
growth, uniform, unicorn phase,and then they get public.
And then the spigot turns off.
Now it's under a microscope.
We can't just go blow dollars oneverything.
And people start to realize thatpath to solving problems, which
was throwing money at problems,is no longer a path.
(33:29):
But they don't have the musclebuilt to solve problems other
ways.
This is not to say that thosecompanies fail, but you see a
lot of these companies getpublic and their first couple
years are a little rocky.
They're a little like, oh, whathappened?
But then on the other hand, youhave these companies that maybe
they didn't go from zero to 250million in five years or even 10
(33:53):
years.
Maybe they went from zero to 250million in 20 years.
But they've been growing at 40percent durably every single
year.
And that becomes a veryrepeatable, very measurable
process for that business.
That phrase that we're startingto hear more about durable
(34:13):
growth.
That's, I think the counter tohyperscale.
Like it is great to grow at ahundred percent for the first
five years and then get kickedin the teeth and grow at 20%.
I think that's great.
I would rather grow at 40percent a year forever.
Dan Balcauski (34:29):
well, you hinted at some things there, I love
everything you just said, but, Ithink the problem, has been
right.
Like we saw those, tech crunch,headlines of, every unicorn
getting minted.
These this, 20 million Series A,a hundred million, whatever
Series B I mean, a hundredmillion actually 20, 21, 22,
that was even small.
(34:49):
It would be like 200 millionSeries B.
I'm curious cause you, I mean,you imbibed of the steroids
yourself, like, Has your, Kindof definition of the kind of
company you're trying to buildand your metrics of success
changed over time.
Like, is that, and how do youthink about your trajectory?
Jason Ray (35:08):
I think the main change is a little more
patience.
I mean, I remember sitting therein the early days and be like,
man, if we're not a hundredmillion in the next four years,
like what do we do?
Like we didn't achieve anything.
And those numbers are like, notreal because you can't even
fathom what it would be like.
And this is where a really goodCFO comes into play because a
(35:29):
really good CFO would say, okay,you sell 35, 000 customers.
How many do you need to get to ahundred million?
Let's think about this.
Now let's look at customeracquisition costs.
Now let's look at how long thatpayback period is.
Now let's look at all theinfrastructure we need.
If you get someone who reallythinks through it, whereas a lot
of entrepreneurs, I can speakfor myself, really.
I'm an optimist.
(35:50):
So I like, I see a target.
I'm like, yes, we're going to godo that.
We, so we were very fortunate tofind a fantastic VC that
partnered with us, OpenView.
And they gave us 30 million in2021.
And we raised at the absoluteheight of the market.
And then we had to really gogrow into that valuation,
especially because While thecompany was growing, the
(36:13):
valuations were decliningprecipitously.
And so I think we've been ableto do that, and I don't think we
would be where we were, or aretoday, without that investment.
But I do think that, It, thatbig of a check, a 30 million
check causes you to do somethings that are pretty inorganic
(36:34):
and we were chasing that 100million Series C.
I mean, we thought we wouldraise a hundred million in, call
it like March, April, May of 22.
So seven, eight, nine monthsafter our Series B, we just, we
thought that would be thecadence.
So we'd planned for that.
So, I mean, we hired, we grewthe company to 170 people.
(36:58):
Because we knew that if we weregoing to have this injection of
cash, we need to be able toonboard all the customers.
We needed to be able to supportthem.
We needed to have the engineersto build all the features and
functionality that they neededbecause we had so many different
looking customers.
And it's the second that hundredmillion wasn't there.
And maybe I just, I can't tell agood enough story, whatever it
(37:20):
is, but we weren't able to raisethat in 22.
Like that's just rounds likethat weren't happening.
And everybody was like, no, wewant profitable growth.
We want, go just flip a switchand go to a different mode, like
get, take your businessprofitable.
And it's like, guys, no, like wejust, we literally had this
thing in motion in a direction.
(37:41):
And it was really painful.
I mean, we went through a riff,which was really painful.
I don't wish that on anybody,especially because.
If you do it the right way,you'll look the people in the
eye that you're saying goodbyeto and you'll look your team in
the eye and you'll takeresponsibility for it.
And that sits with you for along time.
Like you'd never want to be thatfounder that asks people to come
(38:02):
get on board and work with youto build something and then have
them have to exit before beforethe time is right.
Or, they're doing a good job,but you just didn't build a
scalable org.
Dan Balcauski (38:14):
Yeah, well, 22 was a sobering time for a lot of
folks in the B2B software world,both venture capital and
entrepreneurs and employeesalike and has we've been in that
hangover mode from drinking toomuch of the punch at the party
for, I.
for too long, so, sorry, ithappened to you, I, if a
constellation is, of anything,that's, there was shared misery
all around but but I did hear,there, I heard some really
(38:37):
interesting things, in sort ofthe, your entirety of your
answer there, though, which isalso and a couple points, this
has popped out to me in ourconversation today, which is, I
think you said something alongthe lines of by nature, I'm
optimistic.
It was really helpful to sitdown with that CFO to really
kind of sober me up and show mewhat those numbers mean.
And, with your Your advisor,who's telling you about, paying
(38:58):
the money to the executivesearch firm?
I heard, it's often the mostdifficult thing is sort of
getting outta your own way andsounds like you found, finding
those partners that can helpcheck the instincts that, what's
the old Marshall Goldsmith, whatgot you here won't get you
there.
Right?
Like, what is that?
What is that grit, thatdetermination, that optimism,
that gets you zero to one.
It could blow up in your faceand if you're that five to 50.
(39:19):
Team and Getting those partnersand other people to sort of
check your first instinct,right?
Maybe you know it in the back ofyour mind, but it's not your
first sort of go-to play asyou're going along.
Jason, I could talk to you allday and I would love to have you
back on to co to touch on someof these other threads.
But you know, I wanna berespectful of your, and the
audience this time.
So I'd wanna wrap us up withsome some rapid closeout
questions.
(39:39):
Is that okay?
Jason Ray (39:40):
Sounds great.
Dan Balcauski (39:41):
Awesome.
Well, look, we were talkingabout paperless parts and sort
of, what success meant there.
How do you define sort of yoursuccess today?
What does success mean to youpersonally?
Jason Ray (39:50):
It means having had a tremendous positive impact on
our customers and then also onour employees.
I mean, I think if every personthat works at Paperless Parts in
a decade or two looks back andsays, that was the best company
I ever worked for, we were doingsomething really meaningful, I
learned a lot, I'm better offfor it financially.
(40:11):
I think that'll be success.
No question about it.
Dan Balcauski (40:14):
Impact on your customers or your employees?
I absolutely love that.
Look no one of any success getsthere on their own.
I think you are successful.
Has there been a close mentor, aleader who has really helped you
on your journey?
Jason Ray (40:25):
Yeah, I would say Jay Jacobs my co founder.
I mean, he's been, he's a cheatcode.
No question about it.
He has helped us every step ofthe way.
Even, I mean, even conversationslike a couple of days ago, he's
like kicking my ass on AI.
And he's like, come on, like,you got to start thinking about
(40:46):
this.
And I'm like, Jay, like, I'mtrying to hit Q4.
And he's like, no.
You gotta be thinking aboutthis, and this all the time.
He's like, I'm pushing youbecause you got to do it.
And having people like that wewouldn't be here if it weren't
for Jay.
No question about it.
Dan Balcauski (41:00):
And is Jay on the the technical side of the house.
Jason Ray (41:03):
Jay is actually, came from being a customer.
He was running one of theworld's largest rapid
prototyping businesses.
And he ended up selling thatbusiness to a large competitor.
Dan Balcauski (41:13):
And he's the one kicking you in the tail on AI.
Good for him.
Jason Ray (41:17):
Always be learning, right?
Always be learning.
Dan Balcauski (41:20):
Well, well, Jay, we appreciate your persistent
efforts.
I'm sure it's your work hasnever done.
Look if you could, if I give youa billboard, you could put any
advice on there for other B2BSass CEOs trying to scale their
companies.
What would it say?
Jason Ray (41:34):
I was thinking about this one.
Probably don't give up.
I think I think it, a lot oftimes the breakthroughs happen
right in the final moments.
Like, you look at SpaceX justcatching a rocket midair.
I mean, that company would havebeen out of business if the
fourth rocket didn't launch.
They'd given up after the thirdtime it exploded.
(41:58):
You wouldn't be, like, the worldwould be a totally different
place.
So, I don't know, we've pushedall the way to a day.
of cash left in the bank beforeneeding to make a payroll that
would have said goodbye to thecompany.
Stay gritty and persistent.
The breakthroughs, they'rethere.
Dan Balcauski (42:16):
I agree that Elon moment was incredibly
inspirational.
Applause to that whole team.
And don't give up.
I love that positive way to endthe episode.
Jason, if I've absolutely lovedthis conversation, if our
listeners wanna learn more aboutyou, about paperless parts where
can they follow you on theinternet, anywhere you wanna
point him to?
Jason Ray (42:32):
LinkedIn is the best place.
Please feel free to shoot me aconnection on LinkedIn.
Follow Paperless Parts.
If there's something I can do tohelp you, please don't hesitate
to reach out.
It takes a village.
Dan Balcauski (42:42):
Well, Jason, I will put those links in the show
notes for our listeners.
Everyone that wraps up thisepisode of Sask Scaling Secrets.
Thank you, Jason, for sharinghis journey, insights, and
invaluable tips for ourlisteners.
If you found this conversationas a light anxiety to remember,
subscribe so you don't miss outon future episodes.
Thank you, Jason.
Jason Ray (42:58):
Thanks so much, Dan.
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