SaaS Interviews with CEOs, Startups, Founders
1069 Elastic CEO: We're A More Professional Zapier
28 Jun 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Renat Zubayrov.
He is the founder and CEO of a company called Elastic.io. We'll jump into it here. They're helping businesses connect applications in the cloud. Renat, are you ready to take us to the top? Yes, I'm ready. All right. Thank you. Of course. Tell us more about Elastic. What's your business model? What do you do and how do you make money?
We at Elastic.io are providing an integration platform as a service. So this is a piece of middleware which is delivered out of the cloud. And we help our customers and our partners connect different applications being at the cloud business applications together or on-premise applications, legacy applications to the new generation of cloud software service applications. Okay.
And how is this different from like a Zapier or a Segment? Zapier is what's called integration software as a service, so they are more focused on predefined, ready-to-use, simple scenarios, where integration platform as a service, we are working with more comprehensive use cases, high-value use cases.
which is in the same time more complex, bringing more value, but also require a professional approach. So we're more talking to a professional integration people less to the, you know, that they're like end users. Okay. And give me a general sense of what customers pay per month. That way we can understand if you're kind of mid-market, small or enterprise.
We're talking more about at least like four-digit numbers or three-digit numbers starting plans. So we're monthly account revenue. So we are on like 10K plus ARR for an average contract. And also the competition and the competitive landscape on this market is really we're talking about medium-sized to large-sized companies. So it's not unusual to see the six-digit AR numbers in this area.
Got it. But generally, average price point, maybe across your entire base, you're talking, you know, a grand per month or about 10 grand a year or something like that. Okay. And give me more of the backstory. When did you launch the company? Actually, we launched the company in 2013, basically me and one of our co-founders. So we were three co-founders initially.
Two of us were working in this integration area. So we were working for large companies here in Germany who were doing a lot of integration and enterprise service based products. And before Elastica, I was working for a company called Talent, which is one of the world's biggest open source data and application integration vendors. They IPO'd recently, which is a really huge success.
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Chapter 2: How does Elastic.io differentiate itself from competitors like Zapier?
Now, have you bootstrapped or did you raise? We bootstrapped actually, you know, in Germany, we have a very good social system and we basically survived from our savings and this social support for a year. After that, we found we actually got the first round of investments through business angel investments. I should say in Germany the investment works a bit differently.
Chapter 3: What is the business model of Elastic.io and how do they generate revenue?
The landscape is completely different. It's significantly different from the States. People are pretty much more risk averse. But we found a very good business angel who supported us. His name is Fabian von Kühnheim. He's an entrepreneur himself. He started a company, grew it from zero to 700 million revenue, and then later on sold it to Avnet.
And he supported us on the way to the next stage, which happened in March this year. So how much total have you raised? We do not really disclose this number, but it's a seven-digit number. You cut out there. Did you say it's a seven-digit number that you raised? Yes. Okay, got it. Now, are you still operating privately? My research team said you need to ask them about being acquired by MM Vice.
AG, are you part of that company or no? Correct. So as of March this year, we are part of a larger organization, which is M-Bias AG. This is a publicly traded company here in Germany. Although it's a really publicly traded company, which like also grows on the similar pace as we grow like 100% a year, which is really like a success story what we see. And they own 75.1% of our stock right now.
Got it. Okay. So they bought a big chunk of it. Interesting. Tell me more. Let's switch back to kind of your customers, how they think about the product. What have you scaled to over the past four years in terms of total customers using the platform? So right now we're having around about 200 customers, which is companies, business customers.
But during the history of Elastic, we were having around more than 1,000 and 1,500 customers, but it was really small, teeny customers. And then we pivoted towards the more platform-like approach and less software service-like approach. Well, and look, you've probably driven up your minimum price.
So you've moved up market and you articulated earlier your minimum price is around a $10,000 ACV or about a grand a month. I mean, so multiply that times 200. You guys are north of 200 grand in monthly recurring revenue, right? Um, round about that. Round about there. A lot of direct and indirect customers, you know, so it's not majority of our customers. It's to be honest, indirect customers.
I see. As we are pretty much focused now on white labeled and OEM partnerships. I see. Okay. So maybe a little less than 200 grand, but right around there. And talk to me about growth rate. You said a hundred percent year over year. So if I go back 13 months to December, 2016, you were doing about a hundred grand a month then? Um, yeah.
Around about, although I think this is the growth speed up a little bit in the 16. So the 16, we grew almost like 700%. Between 2015 and 2016? 2016 to 17. And 17 to 18, we grew another 100%. Well, 17 to 18, we're still in, right? Like we still have 11 months left in 2018, right? Yeah.
Uh, no, I mean, uh, the grew and we grew from January 17th to January to December 17, around about a hundred percent. And, uh, January. 16 to December 16, around about 700%. Because of the pivot, we actually have to kind of reinvest in the product a lot. We have to like scrap a lot of stuff we did also on the business side and then relaunch it and reboot it and find a new customers.
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Chapter 4: When was Elastic.io launched and what inspired its creation?
The customer position for us is actually pretty high because obviously like in this calculation, what do you see as a customer? Because for us, the customer is like, is it an end customer for partner or partner itself, right?
the partner itself also takes some times to acquire it takes some times to really nurture and and also support and especially in the area where we work with the partners where the partners are buying not like a solution for the they can immediately resolve to the pro to the end customer they buy a tool where they build a solution on top and then resell and this building a solution could take several months
So what is your cap? Would you say then just let's do for the agency partner? My gut feeling would tell it's like something like maybe 10 K per partner. Okay. And how quickly are you able to recover that capital? Is it two months? How quickly do you get that money back after you, after you land the customer? Um, that's a good question.
Um, to be honest, I couldn't really, I couldn't really tell you. Okay. Um, It must be something you track, though, obviously, because CAC and payback period is obviously critical to a SaaS company. I mean, is it generally fairly rapid, less than six months, or does it take a while, like more than 12 months? I believe it's somewhere between six and 12 months. Got it. Okay, got it.
And what's your team size today? We're around about 20 people currently. And where is everybody based? We are based in two countries, actually, here in Germany. And in Ukraine. Ukraine. Very good. All right. Let's wrap up here or not with the famous five. One word answers here. Number one, what's your favorite business book? I think it would be the Lean Startup from Eric Rice.
Number two, is there a CEO you're following or studying right now? I'm reading a book about Amazon's first days about George Bezos. Okay, good. Number three, besides your own, what's your favorite online tool? Google Docs. Google Docs. All right, number four. How many hours of sleep do you get every night? Seven hours. That's pretty good. What's your situation? Married, single, do you have kids?
Three kids. Okay. And my small daughter is currently a bit sick, so. Oh, I'm sorry to hear that. So three kiddos and you're married and how old are you? My age is 37. 37, okay. Last question. What do you wish your 20-year-old self knew? It always takes longer than you expect. That's good. It always takes longer than you expect. You guys heard it here from Renat.
Was that Talend, which was on obviously a rocket ship, then left in 2013 to build Elastic.io. They raised a small amount of capital from a few investors, then obviously sold about 75% of the company to a larger company they're now working with. Obviously still building the company. There are 20 people based in Germany today.
focused on basically i'm going to describe it as a more sophisticated version of zapier right so so uh more power users is probably appropriate way to say it that's reflected in their price point at about a thousand dollars a month minimum 200 customers they're making about 200 grand a month a little south of that 200 grand a month up 100 year over year from december 2016 when they were doing about 100 grand per month healthy growth or not thank you for taking us to the top thank you
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