SaaS Interviews with CEOs, Startups, Founders
1496 Employee Engagement Platform in Brazil Passes $1.8M ARR, Raising $3m on $10m Pre
29 Aug 2019
Chapter 1: What is Solides and how did it start?
founded his company solids.com.br back in uh 2015 today 100 people they're doing about 150 grand per month a thousand customers paying 150 bucks they've doubled year over year up from about 75 000 bucks a month just a year ago they're bootstrapped 14 percent revenue churn per year that's on a gross basis spending 500 bucks to get 150 a month account so five month
Again, growing in a super healthy way down there in Brazil. Again, helping people with reduced turnover costs, increased employee productivity. Hello, everyone. My guest today is Alessandro Garcia. He's the CEO from Solidace, a startup that provides an HR behavioral management service.
Chapter 2: How does Solides use AI to reduce turnover costs?
software platform to improve performance and reduce turnover costs it's a sas company with 100 employees and more than a thousand customers in brazil he's a statistician from ufmg with courses at stanford and berkeley alessandro are you ready to take us to the top okay thank you very much for having me here you bet so tell us tell us more about the company you said a thousand customers today what's the company do
We provide software using artificial intelligence to identify behavior and reduce turnover costs. We know that people are hiding for their hard skills and fighting for their behavior. And then we are trying to figure out how people will have have a better fit to the culture company.
Chapter 3: What is the pricing model for Solides' software?
Got it. And what is the, tell me understand, what is the average kind of company pay per month to use this technology? In reais, 600 reais, it's closer to one and a half hundred dollars a month. $150 a month? Yes, yes. Okay. So it's a very cheap software just to a small and medium business. Sure. You know, $150 per month, and you said most of these customers are in Brazil?
Chapter 4: How has Solides grown its customer base in Brazil?
Yes. We have some customers in Portugal, in the U.S. We have one in some cultures in Latin America, but our focus today is in Brazil. Okay. And behavioral management software. So if I take $150 kind of monthly price point times 1,000 customers, you guys are doing, what, about $150,000 per month right now? Yes, close to that. I believe one, yes, a little more than $1,500,000. You mean $150,000 US?
Yes, yes. Okay, just want to make sure. Take me back a year. What were you doing a year ago in terms of monthly revenue? Half than that. Half?
Chapter 5: What strategies does Solides use for customer acquisition?
Yes, we are... Tracking the triple, triple, double, double, double. We are growing this year two times what we got last year. That's great. Now, are you doing this bootstrapped or have you raised capital? All via bootstrap. You are bootstrapped. That's great. And when did you launch the company? What year? In 2015, we...
We had the software before, but in 2015, we changed all the strategy to SaaS software and started to provide some features in AGI basis like employee records and climate survey and etc. And started to correlate this information to identify some
some kinds of correlations in information about the behavior and performance to find very good information to HR people and provide some benefits on that. You're in a very crowded space, kind of behavior management platform for internal teams. What do you do that's unique to other tools that you're competing with? we are correlating behavior with performance and turnover.
In the world, IBM is doing something like that with Watson. And what we are doing is to make the software to learn on what will perform better in employee management and turnover and see and provide this kind of information to improve performance and reduce turnover. I believe no one in the world is using behavior algorithm to make that. It's only to see how people works in hiring process.
Yeah, it's interesting. I'd like to understand more about kind of how you've grown to 1000 customers. So what are you paying right now fully weighted CAC to acquire a customer? It's close to $500.
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Chapter 6: What is the current team structure at Solides?
Okay, $500, which and if they're paying 150 bucks per month, your payback is between about four and five months. Is that right? Yes, exactly. And where are you spending that $500? In marketing, we are using inbound marketing. Basically, our strategy is focused on small and medium companies. Then inbound marketing is working very well.
And in inside sales process, I believe that it's all of our cost to acquire a customer. And what's your team look like today? How many people? 150 people in sales. 150? Yes. So 150 people total on the team, and how many are sales? No, no, sorry. 100 in total, the team. 50 is in the sales. I see.
Chapter 7: What are the key financial metrics for Solides?
That's a lot of people in sales. Are they all quota carrying? Yeah, they are. Doing good. We are trying to improve the performance in the sales process, but today it's giving us a very good performance.
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How do you pay a hundred people when you're only doing $150,000 a month in revenue? We start to grill the team, uh, And while we get money and then today we hire people when we have money to do that.
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Chapter 8: What are Alessandro's future plans for Solides?
But just to be clear, if you have 100 people today and 150,000 a month in revenue, that means on average, if you use all that money for headcount, you're only paying them about 1200 bucks per month. Yes. So that OK, so labor is just really cheap where you're hiring. Yes, we have a cheap labor here in Brazil. I believe it's close to the market.
It's because the market where we are, then we can hire people in the low costs. Okay, so are all 100 people based in Brazil? Yes. Okay, everyone's in Brazil. Okay, last few economics questions here. So churn is critical in a SaaS business. What's your churn today? 1.9% a month. And that's revenue churn? That's logo churn. Revenue churn is 1.2% a month. Okay, so 1.2% times 12 months.
So you're churning about 14% of your revenue each year. Yes. Okay. And what are you growing customers by? What's your expansion revenue? Uh, sorry, I didn't understand the question. That's okay. Do you have expansion revenue? So if someone that signs up a year ago for 150 bucks, do you expand them to 300 or 400 the month, the week, sorry, the year after?
Uh, we are taking the March of, uh, 15% of the lifetime value to, uh, to retain those customers. Okay, wait, sorry, you're expanding the account by 15% year over year? 15% year over year of the lifetime value. We got the The price where the people were paying in the monthly basis, and we are getting 15% to retain these customers. Okay, I'm not sure I follow you.
What do you mean you get 15% to retain those customers? We are allocating that money to make the rotation. You're allocating 15% of the revenue to retain them. Exactly. Oh, I see what you're saying. Very cool. All right. And those are all on like customer success representatives or something like that? Yes. Okay. That's very good. And you said you're bootstrapped.
Are you looking at raising capital? Yes. Today we are receiving a lot of proposals, but we are trying to select what fund we will boots our company to an other stage. Yep. So if you do raise capital, how much would you want to raise in an ideal world? Two, $3 million at the first round. Okay. So if you raise 3 million bucks, what valuation would you want to raise at? $10 million.
Yeah, pre-money valuation. Do you think? I don't think. We are looking... Well, do you think... Sorry, do you think 10 million is pre-money or post-money? Pre-money, pre-money. Yeah. We are looking at the market here in Brazil. They are paying six times an average of the ARR. Then I believe we are growing faster to... to look for some multiple like that. Yeah. That makes a lot of sense to me.
Makes, makes perfect sense. Very good. Well, let's, let's wrap up here with the famous five. Number one, what's your favorite business book? Oh, I love books. Let me see. Um, I can't, uh, mention just one book, but, uh, there is a book of the, I don't remember the name, but they talk about the comfort zone and how we will improve, but I don't remember the name. That's okay.
Number two, is there a CEO you're following or studying? Today, I'm studying the... I'm sorry. I'm having a problem with that. Don't make somebody up. You can say none. Yeah, the back shy. I forgot the name. Warren Buffett. Yes, exactly. Great. Warren Buffett. It's a biography. Very cool. I love how he does the things. Number three. What is your favorite online tool for building your business?
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