SaaS Interviews with CEOs, Startups, Founders
1 Employee, $600k ARR, How He's Scaling with Systems for Marketing Collateral SaaS
01 Oct 2022
Chapter 1: What is the main topic discussed in this episode?
Okay, so can I take 10 customer times the 5000 ARPU, you're doing about 50 grand a month in revenue? Yeah, exactly. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com.
Chapter 2: What innovative solutions does Clatter offer for marketing collateral?
Hey folks, my guest today is Josh Newman. He's an innovative product marketing technology leader and enthusiast. He's the founder today of Clatter, a creative automation SaaS platform enabling large businesses to create branded PowerPoint presentations, microsites, and marketing collateral in minutes.
The Clatter suite is made up of productivity tools, including Presentation Maker, Collateral Maker, and a bunch of other products currently used by 5,000 users across 10 enterprise customers. Josh, you ready to take us to the top? Yeah, let's do it. All right. 10 enterprise customers and 5,000 users to me screams net dollar retention of 150. So net dollar retention is good.
It's probably is around 150, but not for necessarily the reasons you would think. A lot of it's going to be around that we'll add on professional services to it. So some of it is MRR, but it's a lot of it's around the professional services kind of arm of what we do. So break that down for me.
Last month, let's just use August, most recent full month of data, what percent of your revenue was professional services versus recurring revenue? So it's going to be probably, and it's grown over the life of Collatter, the four years that we've been doing this. Right now, it's going to be probably 70, 72% is going to be in the range of MRR, and the rest is going to be additional services.
I love the split because when you put service on a customer, they tend to stick longer. So I guess tell me about one of these customers, if you can. How's a customer using you today and how many seats? What teams are you going in? The dev team, the engineering team, the marketing team, the sales team? Who's using you? So our day-to-day customers are gonna be the marketing team.
The users of this though are gonna be split between the marketing team and the sales teams. And so think of it, these are big organizations. So one of them, and when I say 10 enterprise customers, if we're being totally transparent, Two of them are actually split where think about an enterprise, think about a Fortune 25 company.
We have a few different customers within that same company, but these are groups that are totally independent. They don't even know each other. So it's the same logo, but I'll split it up as different customers because they're totally unrelated to each other. Yeah. I mean, this is all... I mean, I'm seeing sort of a... It's almost like a content management system, right?
You have a branded slide deck. You want everyone to have access at all times so that they can create their own iterations of the master brand guide, right? And you need to do that across many languages, countries, and brand styles and colors. Uh-huh. Would you agree that's... Yeah, that's exactly right.
And that's where the presentation maker tool and then of course, collateral maker for brochures, microsite maker for landing pages and microsites, summary maker for data heavy kind of upload Excel, JSON, XML, and we'll build you a beautiful on brand looking table chart, whatever you need. Very cool. Okay, so what are these customers paying on average per month to use the technology?
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Chapter 3: How does Clatter achieve high net dollar retention rates?
Okay, when did this all get going? What year? So it started in 2019 and actually started with a bespoke model where we, super long story short, chief marketing officer of one of the largest divisions of this particular customer, came to me and just said, Josh, we've got thousands of PowerPoint slides. We don't know how to organize them. The sales team is struggling.
There's no consistent messaging, no consistent branding. Help us. With my very rudimentary PHP skills, I'm not a developer, put together just a really rough group of concept, sold it through. They said, we love this. We want to build this. They gave us $250,000 to build out this solution. So I think it was kind of a professional services piece at the time. Wait, but hold on.
We can't just glance over that. That's huge. I mean, some people go sell 20% of their business and that's their angel check. How did you convince one of your first customers to write that kind of check up front? Sure. So my background is I've been running an agency since 2002. And so it had been a customer of ours for years.
So we had built the trust, but they saw what this could do and treated it like a project. And so when that... kind of funding came in, it gave us the opportunity to build it. Our cost to build it was half that. So 125K. This launched within just a few months of it launching.
Chapter 4: What is the breakdown of revenue between MRR and professional services?
They said, we love this thing. It took off. People were huge fans of it. So they said, we want to make some big improvements to this. At the same time, sold it through to another customer. So it was able to take that 125 plus another 125 and went to the group that built the spoke model and said, can you build an enterprise version? They said yes. They weren't actually able to.
So we ended up kind of hitting a little bit of an oil slick. This is 2020? This was in end of 2020, beginning of 2021 is when we found out that- So how much money did you lose on that? So we actually didn't lose any money. We just lost a lot of opportunity cost. There was no real money loss because what we had working was good.
But we had one very understanding customer who, even though we were six months late on delivering a product, they understood they weren't under a real time crunch, a little bit of luck there. But at the time, brought in a CTO, he was able to, from a fractional CTO standpoint, he was helping coach the team that we were using. It was a team in India. They just couldn't get it done.
So we transitioned over to a team that Distractional CTO had used on a regular basis, kind of his team, and they're based in Poland. And they've really kind of come together. They've brought it up to enterprise standards. And really just as of about a month ago, we were able to be in a position where we could say, okay, now we've satisfied all the customer agreements.
I can go and start to sell this thing in the marketplace. Who's the Indian firm you're using now today? No, so that we're no longer using the firm in India that the T it's a team in Poland. It's not it's just it's somebody that the fractional CTO it's a group of a group of folks that they have a website though. Not that I know of.
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Chapter 5: Who are Clatter's primary customers and how do they use the platform?
That's plural forward slash valuations. Again, both plural founder path.com forward slash products forward slash valuations. Okay. So you get that fixed though. You scale how many customers now today? So today we've got that. That's where we have the 10 customers. Oh, amazing. Okay, so can I take 10 customers times the 5,000 ARPU? You're doing about 50 grand a month in revenue? Yeah, exactly.
That's amazing. Okay, so 600,000 bucks in ARR. And where were you exactly a year ago? Do you remember? So I knew you were going to ask that. So from a... From an ARR standpoint, we were at 370 a year ago, but total revenue was 675 last year because we were doing more from a professional services standpoint. This year, it's changed a little bit.
We're doing a little bit less, I think, from a professional services standpoint, but... But the MRR has gone up. So that's- What do you think total revenue this year will end up being? We're looking somewhere probably around 850 when the year's done. But much higher percent is true recurring SaaS. Yeah. Now it's 71%. And a year ago, it was 55%. That's amazing. You must listen to the show.
You know all the answers. Often. Often. That's amazing. Okay, cool. So $30,000 up to $50,000. Now more peer-play SaaS. That being said, we love professional services. It does a lot of things for your customers. Now, how do you deliver those professional services? How many folks are on your team today? And how many just do services? Yeah. Sure.
So to split it up, our team, I'm the only full-time person on Clatter. We've got Media Tavern, which is my agency. They're the folks who... And Media Tavern does a really nice job of running itself. I do business development and some of the high... The customer service with some of our higher-end clients. But the professional services, we'll just subcontract out to Media Tavern.
So it's something that we're already doing. We're already... designing PowerPoint slides, microsites, flyers, brochures. So you're the only full-time employee at the SaaS company, which is doing almost 600,000 bucks in ARR. That's correct. Wow. Okay. So how are you getting your engineering done today? Where's the engineer? It's all, that's the team in Poland. It's a subcontracted team.
Oh, but they don't have a website or anything. No, no, it's just, it's, yeah. How'd you find him though? How'd you find the person in Poland? So my fractional CTO, who's just a guy in Westport, Connecticut, where I live and where Clatter's based, just a local guy that I've known for years. And he had some availability. He knew my struggles with the team in India.
He said, I'll come in, I'll help you out. He brought his team in. Which is the Polish team. Yes. Oh, interesting. Okay. So he's not, he's not full time, but he's how you get all the development work done. That's correct. I, this is amazing. Okay. And so 50,000 bucks a month, again, we're just talking the clatter, not media tavern, 50,000 bucks a month revenue on clatter.
I imagine you're very profitable. Yeah, it is profitable. This year we'll do, looking at my spreadsheet, we'll do about $274 in profit. And how do you put your capital allocation hat on for a second? As a founder, how do you think about taking that profit? Do you take it out as a dividend and go buy real estate? Do you put it in a media tavern? Do you reinvest in the software company?
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Chapter 6: What pricing model does Clatter use for its services?
So we've actually we've. put in reserves about 200K, where that can be used for a rainy day, can be used for some marketing that we're going to do. So instead of needing to go and raise immediately or needing to take some sort of debt, we have a little bit of money to play with. That's awesome. That's great. Okay. So bootstrap today, a lot of profits, one on the team.
So how many, here's a good question. How many people last month did you pay at least a dollar contract or like including your guy in Connecticut? Uh, okay. So, um, including some of the folks at media tavern who would have done the professional services, it's probably eight or nine. Okay. Interesting. Interesting.
I'm just, I'm always hunting for who's going to build the first like 10 million or 50 million IRR company with one full-time employee. So you're, you're on your way for a hundred million. I hear your, I hear your teasers. Yeah. Yeah, you're on your way.
I mean, it takes so much systems discipline to build around contractors because the way you get a cheap contract, cheap labor to perform at A-plus levels is you give them a great system to follow and building the system is a lot of work. Oh, for sure. Yeah, but you're sort of leaning on the development side systems. You're leaning on this guy in Connecticut. What about marketing and sales?
So that part, I haven't gone down that road yet. It's part of it that is my background a little bit because that's what Media Tavern does. So got a plan in place. Right now, it's just figuring out kind of where do we want to put the money? What's going to be kind of our next approach? Interesting. Yeah.
Okay, before we wrap up with the famous five here, how are you getting, you know, obviously, you can sell your agency customers on the SaaS product, but then you got to find a new growth channel, right? So how are you getting new customers today? Yeah, so so we, what we're going to do is I'm starting with that from from really the floor up.
So I'm going to be starting with the just my my who do I know list. So going to folks that I know within my network. We're working actively on SEO. Pretty soon, I'm going to take the product hunt approach, which I know you've talked a little bit about that. So I think it's some of those. I'm going to look at affiliate deals.
I think a big one to agency partners to be able to get literally other professional services firms. And if this needs to be a white-labeled product, if it's something they can just sell in and we can figure out what percentage and You know, how do we want to do that kind of, you know, over the first year or two of some sort of affiliate fees? I'm thinking that's going to be the approach.
And kind of my next move is to bring on kind of a fractional CMO to kind of listen to my ideas and kind of help me pull it all together. That's awesome. Well, we're certainly rooting for you. Hope you come back around a year and give us an update. But in the meantime, let's wrap up here with the famous five. Number one, favorite business book. Favorite business book.
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Chapter 7: How did Clatter secure initial funding for development?
Man, learn to code the right way. Don't be some sort of hack to build MVPs. So funny, all the engineers say learn to sell and all the sales, most people say learn to code, right? It's the nature of SaaS. Guys, Clouder here, incredible story. Start off as an agency. They still run the agency, right? The Tavern Company.
Now though, Clouder.io helps you launch your presentation templates and apply one brand style guide to thousands of presentations that you're building. They've got 10 enterprise customers today paying 5,000 bucks a month on average, 50,000 a month. in revenue up from 30 grand just a year ago.
They've got about 72% of their revenue coming from pure SaaS, the other professional services, which is great. It's allowed them to stay profitable today and also bootstrapped. A lot of cash in the bank, very profitable. Team of one. He's got nine contractors he pays on the side as they look to continue to scale. We'll see what happens next. Josh, thanks for taking us to the top. Thanks, Nathan.
I'll see you in New York in March at SaaS opening. Let's go, man. See you there. Take care. Awesome. Thanks, Nathan.