Chapter 1: What is the main topic discussed in this episode?
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Now serving about 1,000 customers, paying 80 bucks a month. So about a million dollars in run rate. 7% logo churn per month, 5% revenue churn per month. Working on bringing, obviously, both those numbers down. He's bootstrapped, which I love. Team of five people based in Europe. They're spending about 100 bucks to get a new customer, so two-month payback.
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. 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 Thomas van der Klei.
He's the founder of Tap Affiliate, a company that builds world-class tools for tracking, managing, and growing affiliate programs and referral programs. In previous lives, he's created an ad-supported free printing service for students and a social network for startups. He loves ad tech, vinyl records, and needless to say, cats. Thomas, are you ready to take us to the top?
Yeah, definitely. Let's go.
All right, Tap Affiliate. Tell us about the company. What do you guys do, and is your model, revenue model, pure SaaS?
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Chapter 2: What is Tapfiliate and how does it operate?
So for some people, hyper growth is success for me in this company is much more, uh, it's much more holistic thing. So I, you know, I'm for, for one, I'm very, very picky about whom I work with, uh, like extremely picky because, you know, like, working as my hobby. So if I want to go to the office, I want it to be, I want it to be like amazing there. And I want really nice people around me.
What actually happened? Like specifically what happened? Did they like do something behind your back or like what, what happened?
No, it were several, it's, It's such a long story that it's hard to sort of compress that into a couple of sentences. But basically there were multiple investors on board. One was a big company who was sort of, I think you'd say, spotting us working capital by giving us their products for free. Then we had financial investors on board and they were basically playing games together.
And we were just young guys. We were like 21, 22, didn't know what was going on, didn't know anything about business. And they were sort of like, big forces fighting each other. And we were sort of like the bull being kicked around at that point. So it's, it's, I can't put it, you know, how much, how, how large is that company in terms of ARR? Oh, that company. No, we, uh, we sold ads.
So that was not, that was not recurring revenue. That's also one of the reasons why I started the sales business because back then we had quite large customers or nice customers. We had like Dell.
And how big was the company? I'm just curious. And like your best 12 months, how many, how many revenues?
We did like, we did like a 400 K in yearly revenue. Okay.
Okay.
Well, you made a smart decision then. It was a student company.
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Chapter 3: What is the typical customer profile for Tapfiliate?
By the way, the new website's gorgeous. It's so funny when you look at websites that are gorgeous. Many times they convert way worse than the ugliest websites you've ever seen.
Exactly. It's the eBay thing. Craigslist, right? Craigslist, yeah. There you go.
Well, this is great. Okay, so I love this. Five people, bootstrapped, doing your own thing, having a lot of fun. Where's the team based?
We're in lovely Amsterdam.
Everyone's in Amsterdam.
Everyone is in Amsterdam. Yeah. I'm a bit old school in that sense. I like everybody being together in an office. That's great. And it also has to do with what I said before. For me, going to work has to be as much fun as my free time. So I like to be around people. So I want to be around people I work with.
Churn. What's your churn today?
Yeah. So logo churn, uh, is about 7%, which is quite high per month. Um, yeah, per month. Um, but it could be way lower. Uh, if we, you know, if we took a different approach in the sense of, you know, getting more people on faster, because like for, for a long time, it was only like three people, the company. So there's only so much you can do.
So there's still revenue. What's the revenue churn?
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Chapter 4: What challenges has Tapfiliate faced with its new website?
So you get 15% more commission, basically.
You're not talking like payment transaction fees. You're talking about the networks and typically the cut that they take.
Yeah, exactly. So death is all taken out, which means you can be way more competitive.
That's interesting. Okay, let me ask a couple of questions here. A thousand customers, how many affiliates have they all signed up altogether?
That is a number I'd rather not divulge.
Okay. I'm just curious, is it typically a one-to-one ratio or it's like one to 10 or...
No, it's way more. And again, it really depends. We have like our tools pretty flexible. So we have people using our tool as a referral marketing tool. So what they do is they have like an Uber or like Dropbox style affiliate program where they basically just use infrastructure. So when a customer signs up, they sign them up with us through the API.
They grab their affiliate link, present that within their own portal. So basically they would sign up each and every one of their customers as affiliates.
ah so they forget really big that's not really that's not really a fair number and then we have like these other customers who already work with an affiliate network but have one or two very large affiliates uh with whom they have contact directly and with whom you know they're like okay we we we already like have all the contact together uh we can pay you out directly like why would we do this through an affiliate network and pay them a cut yep so they sort of like
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Chapter 5: Why did the founder choose to bootstrap the company?
The question is, if you had 5 million bucks, could you triple year over year? It's hard to actually measure that and actually feel it.
Yeah, exactly. And that's why it's always lingering. But we used to grow 100% year over year. It's just this year that we've been stumped by the new website.
Are you in any discussions to sell the company to anybody?
there's always people knocking.
Yeah. What, if you did sell, what things, what checkboxes would you have to check?
That's a very good question. You know, the multiple has to be good, obviously. And, you know, it really depends on the kind of buyer. You know, what I would love is to, you know, get someone who wants to do a strategic acquisition, you know, to, for example, to enhance their own product or to, yeah, for it to be part of their product development. So we can sort of like,
grow into that company learn something along the way you know because i've never been in a situation like that where um so i think that will be the most interesting for me and for my team from a growth perspective so um yeah let's just let's just keep it at that that's good when you say good multiple i mean are you talking 3x 10x 4x what do you consider the range of revenue x right yeah your arr
yeah so yeah no i uh i'd say five times will be good okay interesting well i think you might get some points we need to really wrap up yeah sorry i wouldn't say that we really need to like ramp up growth like harder than this to get that's something better than that yeah i was gonna say even 5x with seven percent churn and 20 to 30 percent year-over-year growth i think you'll have a challenge but but uh it sounds like you historically have had better numbers and you're working on getting back to those so that's great there's a lot to win still
That's good. All right, Thomas, let's wrap up here with the famous five. Number one, what's your favorite business book? Influence. Number two, is there a CEO you're following or studying?
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Chapter 6: How does Tapfiliate acquire customers and what are the costs involved?
And what's your situation? Married, single kiddos?
Married and obviously two cats.
Two cats, no kids. And how old are you, Thomas? I'm 31. 31. Last question. What do you wish your 20-year-old self knew?
Um, You're on the right track. Keep going.
You're on the right track. Guys, there you have it. Tap Affiliate founded many years ago. Call it, let's see, 2014. Now serving about a thousand customers paying 80 bucks a month. So about a million dollars in run rate, 7% logo churn per month, 5% revenue churn per month. Working on bringing obviously both those numbers down. He's bootstrapped, which I love. Team of five people based in Europe.
They're spending about a hundred bucks to get a new customer. So two month payback. Looking good, Thomas. Thanks for taking us to the top.
So much.
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