SaaS Interviews with CEOs, Startups, Founders
1247 This SaaS Product Has No Website but Does $3m in ARR, How?
23 Dec 2018
Chapter 1: What is the story behind the creation of BERT?
had a lot of success building about a five million dollar company but many many different product lines recently decided to basically split these out bert is the data play above.ai is the sas play that ties more to sales and marketing people and crm data customer data specifically they've got 100 customers on that platform doing about three million bucks in arr at this point that's up from a million just a year ago so healthy growth rate uh three million raised for the parent company again this spinoff uh occurred in 2016 now the team of 20 folks dedicated 140 net
revenue retention year on year. So healthy stuff. 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 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.
Chapter 2: How does BERT generate revenue without a website?
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 Gustav von Sydow. He's the CEO and co-founder of a company called BERT, where they're building data intelligence companies.
In a previous life, he hustled in e-commerce, developed award-winning marketing campaigns, and spent way too much time at advertising and internet technology conferences, presenting at events such as Cane's Lions, Web 2.0, Demo, and TechCrunch 50. All right, Gustav, are you ready to take us to the top? Yes, I am. Good.
Chapter 3: What is the customer engagement platform and how does it work?
All right. Tell us about BERT. What are you guys doing? How do you make money? So BERT is actually a company that develops, well, marketing tech companies. But on a day-to-day, I run our customer engagement platform, which is focused on the ad industry. So we help our customers automate routine tasks and identify opportunities to be more successful. So...
Typical next generation intelligence company, I would say. Okay, and what's the revenue model?
Chapter 4: What is the revenue model of BERT's products?
Is it a percent of spend or is it a SaaS model or what? So all our companies have a SaaS model. So typically mid-market or enterprise customers. And what do you mean all your companies? Are you spinning companies out of this or what? Yeah, so we originated out of an agency, built a product, then built another product, and then sort of ran that as a platform.
But now we decided to sort of chop it up into pieces, which has been, well, significant for our growth curve. Okay, so I'm trying to figure out, I want to focus on one thing right now. So maybe let's focus on kind of the one baby you have that's doing the best in terms of maybe revenue or growth. Which one do you want to focus on?
Chapter 5: How has BERT achieved significant growth in ARR?
Yeah, so let's talk about the customer engagement platform. The other sort of companies we have GMs for. So that's the one that I spend my time on these days. So what's the URL for that? What's it called? So that's actually a URL called above.ai, which is not launched yet. So it's going to be launched in the next week or two. Okay.
Now, so have you pre-sold anything or it's pre-revenue, pre-product, pre-everything? So we carved it out last year.
Chapter 6: What challenges did BERT face during its early years?
So we ran it as a product line. So it's doing about $3 million right now. It's growing about 140, 150% year over year. And describe kind of what it does. It sounds like it's kind of operating right now, but it doesn't have a website yet. So what's it do? So it's a product line out of our sort of one of our products, and it integrates all our customer systems and provide, well, I guess, through a
smart alerts and automated reporting for ad sales. So typical users would be someone within ad sales trying to figure out what to do next. What are the actions that I can take to sort of grow my business or sort of focus on the opportunities that have a high likelihood of closing and things like that.
Chapter 7: What are the customer acquisition costs for BERT's products?
So is this sit on top of like the CRM, the salesperson walks in the morning and you tell them who they should call first or what? Yeah, exactly. I mean, CRM is definitely one of it, but it's also like ad serving systems, measurement systems. So I'd say typically we integrate with about 50 or 60 systems on a reasonable size customer.
So the media companies that we work with have a very fragmented sort of sales and marketing and ad stack. And how many customers are on above.ai today? So it's about a hundred or so sort of individual companies, but many of them sort of are in within sort of media groups. So we have about three of the top 10 media groups in the world that use the platform in some capacity right now. Okay.
And you mentioned a 3 million run rate.
Chapter 8: What future plans does BERT have for expansion and funding?
So, you know, 3 million divided by 12 monthly, that's 250. And that means each customer, your hundred are paying about what to, you know, 2,500 bucks a month for the tool. Yeah, but typically our contracts are sort of structured on the enterprise level. So it'll be like two, three, $400,000 a year contracts. Got it. Okay, good.
And then walk me through, I want to understand more kind of why you decided to break all these products out. How does BERT interface with Above?
Yeah, so we, I mean, we wedged it initially between our underlying customer data platform and sort of this engagement system that sat on top because a lot of customers were asking us to sort of get systems, get sort of connected systems that were not our platform. So we had a data platform and we built sort of tools on top of that.
And then it turns out that people also wanted to connect it to their CRM. And then we had customers that said, well, I already have a data platform, so I don't need yours. So at that point, we sort of figured that if we divide the company up in two, it should make it easier to grow either one of them. And once we started that, then we realized that, hey, you know, this is actually two companies.
And then we started spinning things out. Got it. Which made it easier to grow. So it makes it easier to grow. Give me more economics on above.ai. So churn is critical in a SaaS business. What's above.ai's churn? So we're about 140% net revenue retention. Okay, 104 or 140? 140. Okay, and where is most of the expansion revenue coming from? What are people upgrading for?
So it's either you grow it to more companies within the same sort of account. So you grow it from 10 markets to 17 markets if you're in a local media company, or you expand it in terms of adding more integrations and more capabilities. Okay, good. So 140% net revenue retention. What about overall growth rate? So today you're 3 million ARR. Take me back to June 2017. What were you then?
So we're doing about half that or a million or so. Oh, that's great. Okay, so healthy growth. And it sounds like a lot of that growth is, would you say more of that growth is coming from expansion revenue or adding new customers altogether? So, I mean, we've been focused on building like a strong core customer base of blue chip customers that could act as references.
So it's only recently that we started to do like prospecting and legion to the extent we're used to. Okay, good. So most most the revenue expansion is then coming from exactly that expansion revenue, not not brand new customers. Yeah, so about half half, I'd say. Okay, good. And when did you start this product, even if it wasn't named above back in the day?
When did you launch this particular product? So we carted out into a separate product line about a year and a half or late 16-ish. And we sort of broke it up into a separate team mid last year. And that's where we really started to see great growth. So what's the team now just dedicated to above how many people? So we have a...
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