SaaS Interviews with CEOs, Startups, Founders
1238 With $50k in MRR, They Help Building Developers Scale
14 Dec 2018
Chapter 1: What is the background of HomeMaker.io and its revenue model?
Founded in 2015, today doing about, call it 45-ish, 50, no, 56 grand per month. That's up year over year, about 100%. You know, they're doing about 25, 30 grand per month back in October of 2017. Bootstrapped, except a new revenue-based financing vehicle they took from Round2 Capital based out of
austria they've got about 45 customers which are developers that's who he's serving they pay about 15 grand per year with natural accelerators year over year which is driving net revenue retention north of 115 116 team of seven people based in sweden building this out about to double down on research and development 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 of hundred thousand dollars to two point seven million.
I had no money when I started the company.
It was one hundred and sixty million dollars, which is the size of many IPOs. We're a bit strapped. We have like twenty two thousand 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.
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Chapter 2: How does HomeMaker.io serve its customers in the real estate sector?
My guest today is Sebastian Karlsson. He's a go-to market specialist within vertical SaaS or B2B. As partner in Serendipity, one of Sweden's most well-renowned private incubators, he's worked and implemented a number of go-to strategies for SaaS companies. He likes to work close to customers' revenue streams and where there's high ACV. Today, he's focused on a company called HomeMaker.io.
Sebastian, are you ready to take us to the top?
Yes, we are.
All right. Good. What does HomeMaker do and how do you guys make money?
We make money by selling our product to project developers. So real estate developers is our main customer. And we focus on getting closer and closer to the heart of our customers' business. So we have four different modules today. We can sell all the modules standalone.
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Chapter 3: What modules does HomeMaker.io offer to enhance customer value?
We have one for helping our customers with creating more leads when they sell apartments. We have one that creates value when they get new revenue streams, digital revenue streams from add-ons when they have bought an apartment. And we also have one module that takes care of the guarantee after they have moved in. And also we're looking into the renovation.
So we have customers in all of these segments and we We think we might also going for the CRM, focusing a lot on the real estate business.
Help me understand how a CRM in real estate would be valuable. You know, someone buys a home and that lead in your CRM might not be valuable again for another five, six, 10 years when they want to buy another house.
Yeah, valid point. But what we're looking for and also want to create or at least talk about them to them, I mean, the product developers to create new revenue streams. because they don't really focus on the one who's buying the apartment as a customer, but they still have a lot, a lot, a lot of customers that they could actually get to sell more services to.
Like what?
Like you can sell furniture, you can sell renovation opportunities, you could sell You could sell food. Amazon needs places to get into the apartments or the housing associations. There are multiple opportunities, but we have just scratched the surface for this business.
Okay, so brokers are the ones paying you for these many different modules. Which module is your most popular right now in terms of revenue?
It's actually a homemaker service, which is the most boring one. It's just for taking care of the errands and the guarantee errands when something is broke. And it's not the brokers that pay us. It's the product developers.
Okay, the project developer.
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Chapter 4: How does HomeMaker.io plan to innovate within the real estate market?
It's just a service company?
Yeah.
No, no, no. Everything is also, so the service, the guarantee, it's like, it's like a complex fresh desk, uh, our, our solution. So, so we are selling this B2B again, but, uh, Of course, we are including the consumer in this year. So we are just a software as a service company, taking away all our consultancy streams as much as we can.
And when you look at kind of what the average developer might pay you per month or per year, give me an average. I'm sure you have a bunch of different price points, but what's the average?
Yeah, I think we're around $15,000 per year per customer. Approximately. And we have quite a good net revenue retention with our customers because we have, as I said, four standalone products that we can sell throughout the circle or process. Sebastian, what's good there? What's good? I think we should go up to around...
$20,000 to $25,000 per year for the type of... Our time is so small, so we need to hire the annual contract value, of course.
So when you look at the cohort of developers you signed up exactly a year ago in October 2017, those signups can either expand and go up to $30,000 ACVs, or they can also contract or churn totally. So when you look at your net revenue retention, what is that? Around 160%. 116 or 160? No, 116. 116. That's pretty healthy though.
Yeah, and we have just taken in some capital in form of round two. It's a revenue-based loan, which is quite new here in Sweden. And we just took that money and put it into R&D for us to take a bigger share of wallet from our customers. Because there are so many analog processes today in this business that we can... digitize so much more.
So I think our NRR will be a key KPI for us to improve our business.
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Chapter 5: What is the significance of net revenue retention for HomeMaker.io?
We have 45 customers today. And most of them is project developers, but we also have some construction companies who is buying our product.
Okay, so 45 of these folks paying $15,000 ACVs or about $1,200 per month. That puts you about $56,000 per month right now in terms of revenue. Is that right?
Yeah, your math is good.
Okay, or about $700,000 in annual. So the reason I ask that is because typically these revenue-based loans, you have to hit a minimum MRR before they'll kind of talk to you. So which firm did you decide to work with for that revenue-based financing?
Round 2 Capital.
Round 2? Yeah.
capital yeah so they are based in in in austria but they are the founders is ela has a history of sweden and also we have a good relationship throughout the history with with the serendipity as the incubator behind homemaker as well
If you guys are like me, it was quite a shock to me when I was building my first company, Heyo, and we reached like 10, 11, 12 people. And all of a sudden I'm going, wait, why am I getting notices from all these states? And that's because I had to file payroll and stuff in these states as we started hiring people from remote locations. It was the biggest pain in the butt. I hated the paperwork.
I hated the payroll. And so now today when I'm launching new companies, hiring new remote employees, I use a company called Gusto. It's very simple. Payroll benefits in HR for modern small businesses. What I like most, and I've timed this, it takes about seven minutes on average for my folks to run payroll. It's got fast, easy to run payroll, including W-2s and 1099s.
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Chapter 6: How does HomeMaker.io utilize revenue-based financing?
So listeners of the podcast, you can go to nathanlaca.com forward slash gusto to try a demo and test it out. Again, that's nathanlaca.com forward slash gusto, and you'll get three months free once you run your first payroll. All right, I'll see you there. So these revenue based financing things can take a bunch of different kind of terms and angles. Typically, there is some form of repayment cap.
Usually it's like one point three to one point eight over like three to five years. And then you're paying back as a percentage of gross receipt each month, usually between three percent and like nine percent. Can you kind of dial in the terms for us? What do you agree to?
I think you were quite spot on. I will not say exactly what our terms are, but you are really, really in the range where we pay. But we finance that because we have, if you look in what will the range be for price index rates per year, we are actually paying our mortgage or the the interest with our price index raised every year.
Wait, so you're pricing, Sebastian, I don't understand that. Sorry, you're paying it with your what index?
Price index. We always raise the price index every year for our customers.
Oh, so price index is your way of saying just what your price point is?
Yeah, I know exactly. So if we take, for example, $1,000 per month in one year, and then the following year, because we have quite long contracts, so even when they extend or have a longer contract, every year we raise them by X percent. I will not go in exactly how much the percentage is.
It's more than what you're saying, though, is it's more than the interest rate. Yeah, of course. I see. Interesting. Are those the natural accelerators built into your pricing plan? Are those built into the contracts up front or do you renegotiate those every 12 months?
No, they're built into the contract.
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Chapter 7: What strategies does HomeMaker.io employ for customer acquisition?
And we can also, we have also negotiated in our terms that we could, if we want to, continue to borrow on our ARR.
Yeah, yeah, yeah. They'll kind of do a refi or recap as you grow. Exactly. That's great. Put this all on a timeline for me. When did you launch the company? What year?
2015. We were go-to-market ready.
Okay. And what are you at today in terms of total team?
We are seven people and we have two part-times as well.
That's great. So seven folks. And is everyone in Sweden or Stockholm where it gets spread out?
No, everyone is in Sweden. We have one guy in Poland, but we are quite a multi-ethnical team though.
That's good. And then besides this financing, are you bootstrapped or have you raised? Bootstrapped. That's great. Okay. And did you, the funding that you have now available to you, I mean, did you do like a hundred grand or 500 grand? How much did you raise there?
We took in, now I just need to do this in dollar, approximately $120,000 we just took in. And that's just for cover there. We need more R&D. That's where we're focused right now.
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Chapter 8: What are the future growth plans for HomeMaker.io?
And of course, we're getting a 12 month payment in advance all the time. So it's easy for us to still scale, but we need to lower that. And we're focusing quite a lot now on email marketing. We're doing account based marketing and we're also going into marketing. to going more in depth with the SEO in different markets. And we haven't been really good at that.
And I think Sweden as a SaaS market, we are not really as good as you are over there in the US with the marketing and lowering the cost of customer acquisition.
You might be giving us too much credit, Sebastian. We'll see. All right, let's wrap up with the famous five. Number one, what's your favorite business book? Dale Carnegie, How to Win Friends and Influence People. Number two, is there a CEO or founder that you really follow or like?
I actually like a company in Sweden called Fortnox. I don't know the CEO, but Fortnox has an amazing go-to-market strategy, which I really, really is fond of. Which is what? They have actually teamed up with the big fours, PWC, Deloitte, EY, and what's the last one?
PWC, Deloitte, McKenzie.
Yeah, but they have all the auditors and they are selling their product for the bookkeeping. And I think that's amazing. So they put in partnership from the beginning.
It's a little channel strategy there. That's good. Number three, what's your favorite online tool for building your business?
up sales our crm marketing automation tool and also we do the invoice from there so that's the that's the heart of our business right now up sales.com yeah up sales.se that's a swedish company as well very good i like that lots lots of stuff happening in sweden that's good all right number four how many hours of sleep do you get every night i think around six okay that's good and what's your situation married single kiddos
Single.
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