SaaS Interviews with CEOs, Startups, Founders
1518 Bynder Hits $48m ARR, Another Acquisition On The Way?
20 Sep 2019
Chapter 1: How did Bynder evolve from its inception?
Finder rolled out of his agency back in 2013. Big M&A happened recently. They've just, you know, they did about 19 million bucks in terms of run rate and early of 2018. Then did the acquisition. You know, now they're serving 1600 customers. $30,000 ACV is a healthy average to call it, you know, 4 million ish right now per month in revenue. The economics look good.
93% revenue retention annually, 140% net revenue retention annually. That 93% was obviously gross revenue. You know, trending towards a 12-month payback period, team of 350 folks between San Mateo, Boston, London, Spain, and remote locations as they continue going after the damn space. Hello, everyone. My guest today is Chris Hall.
He's the CEO of Binder and has grown the company to over 350 employees with seven international offices in just four years. All right, Chris, are you ready to take us to the top? Yeah, go for it.
Chapter 2: What are the financial metrics of Bynder's growth?
All right. Tell us about the company. What do you guys do? And are you a pure play SaaS model or not?
Yeah, we're a pure play, born in the cloud solution, and it's basically the core of the application is the DAM, the Digital Asset Management, which is basically a repository for all your digital content.
And so as you're working with customers here, give us kind of a quick glimpse into what they're paying on average per month for this.
Well, we have two sets of customers. We have our sort of SMB enterprise, and that's around... close to 30K US dollars a year. And then there's the larger customers that are upwards from a hundred up to, we're getting close to the million mark.
Yeah. Is it fair to say though, you probably have power laws in your customer base and the average is probably closer to 30 or 35,000 bucks a year? Yeah, that's right. Yeah. Okay.
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Chapter 3: How does Bynder ensure customer retention and satisfaction?
Okay. And put this on a timeline for us. When did you launch the company?
So we started end of 2013, or we incorporated there. It was a spinoff of Label A, a development agency I started in 2008. And it really started as a sort of a side project that we started using ourselves to get digital assets from one place to the other. And that's where we learned, hey, this is kind of useful. And it happened to be called Adapt. We didn't even know that when we started it.
And how'd the spin out work? Is the agency on the cap table of Binder? And did you have to put up any capital to do the spin out?
No, this was basically it was a spin out from Label A, which I also owned. So in August 2016, we closed the Series A with Insight Venture Partners. And that's been the first sort of cash in there.
Okay, so how much capital have you raised to date? The 20 million euros that we raised in August, two years now. So what is that? It's like 21 million USD, something like that? 20, 23. Oh, 23, okay, got it. Now, where are you based? Where's home for you? Right now, I'm in Amsterdam. Okay, so is the team split between the US and Europe?
Yeah, so we have, due to the acquisition of Webdam, a shutterstock company that was a carve-out from them, they're based in San Mateo on the West Coast. And with this acquisition beginning this year, That was a big team over there, so we grew quite significantly in headcount. But we already had an office in Boston, London, Spain, Barcelona, Rotterdam, and Dubai.
So this was just a very big extra office to add.
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Chapter 4: What challenges did Bynder face during its acquisition process?
So there's quite a big workforce in the US.
I'm saying you're at about 350 folks? Yeah, that's right. That's great. And so give me a sense of what you've scaled to. I mean, you launched this thing back in 2013 as a spin-out from the agency. You're not active day-to-day in the agency anymore, correct? Nope. Okay, so purely kind of on the SaaS product.
So what have you scaled to over the past four or five years in terms of total customers on the platform?
I think we're at around... What is it? Let me think. This is combined 1,600. 1,600? Yeah, something about that.
And when you say combined, you're doing the math. You're taking your enterprise plus your SMB? Yeah, exactly. Okay. Now, I mean, is this fair math? Can I take the 1, you know, the 1,600 there times the, you know, $30,000 ACV that puts you, I think, at like, what, $4 million a month or something like that in terms of run rate?
Um, yeah, that adds up pretty close.
Yeah. In that range. Yeah. And, and with that in mind, what does growth look like? So if you're doing 4 million a month today, where were you a year ago?
Um, so it's, it's more about, especially at this stage, it's more about, uh, growth combined with, um, the capital efficiency. So, you know, they're also looking at EBITDA more.
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Chapter 5: How does Bynder manage its international team?
You bring that into consideration and we're trending healthily above the rule of 40, which is basically the growth percentage plus your EBITDA.
Yep. Yeah. So can you peel back that onion for me? Is growth like lower or higher? And then obviously you make up the rest to get to 40 or 50 with the cash flow.
Um, so, uh, in previous years, it's been, it's been negative, obviously the, the, the cashflow. Um, but now we're trending, uh, towards significant cashflow and, and that's just making the rule of 40 also growing.
What I'm trying to understand is what you're growing revenues at year over year. I understand you're past E40 cause you've gotten healthier from a cashflow perspective, but a year ago today where, I mean, have you doubled ARR over the past 12 months?
Yeah. Uh, so we were at, I think 16 at the beginning of this year. Yeah. That's euros. So call it 18. So we went from, we more than, than, than doubled.
Okay. So at the beginning of this year, you're doing 18 million bucks in ARR. Is that accurate?
The beginning of, of yeah, I'd call it a little, a little bit higher than that. It's 19 million. And then came the acquisition with WebDAO.
Okay. Yeah, what I was trying to understand, that 19 figure you just gave me, that was your run rate in January of 2018? Yeah. Which was like 10, 11 months ago. Yep. Got it. Okay.
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Chapter 6: What strategies does Bynder employ for customer acquisition?
And now obviously you've scaled and you continue to grow. What drove the desire to drive additional cash flow versus continuing to reinvest cash and operating at breakeven?
Um, I think it was, it was, it wasn't really a goal on itself. Uh, it's, it's, you want to grow as fast as you can, as efficiently as you can. Um, and so it wasn't sort of as much a deliberate choice of, uh, saying, listen, we'll, we'll, we'll burn a little extra or to grow faster. We were growing at sort of an efficient, uh, efficient enough rate.
The more you start burning, it's really difficult to add a couple of more percent. Uh, so it starts costing more. So it was more, um, uh, based on, on, on just at least having that as a, as a longer term target to be cashflow positive. I think that's a healthy, healthy way to go and go forward in your budget.
But is this because, I mean, look, a lot of times when companies start hitting the 60, 70, $80 million run rate phrase, it sounds like you're probably maybe closer to 40 or 50 right now, but once you start hitting that phase, it becomes more difficult to spend money to get customers because you've, you're starting to tap out all the potential pools, right? I mean,
And so you see profitability, you see profitability grow because of that, because you're, you're saving more money. So, I mean, is that what's happening?
Uh, so yeah, that's, that's partly due to this maturing processes and economies of scale as well. Um, so, you know, despite, uh, doing a pretty difficult, uh, acquisition, we still maintain or maintain to increase that efficiency and accelerate growth. Um, despite, or, you know, whilst you're also getting some synergy effects from that acquisition.
Mm-hmm. What you said difficult, what made the acquisition difficult?
Well, mine and I was time difference for starters. And it was, you know, there were 80 or 90 people there that, you know, that's not something you can just absorb easily. That's a big project to sort of combine those companies and to make sure that they're maintaining
their own organic growth, but moving towards and merging them together as one company, basically, with one product and one product roadmap, one support. That's a difficult integration process.
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Chapter 7: What role does cash flow play in Bynder's growth strategy?
And that the 19 million in ARR that you gave me, that was before the acquisition, right? That was before. Yeah. Okay. So you buy it now again, that's really helped you almost still, you know, double or more than double over the past 10, 11 months. Um, the cash you used to do that deal was a lot of, I mean, it was a lot of that. The reason you raised the 23 million.
No, that was, um, that was a year before that as well. And, um, or two years, actually one year and a half. And that was pure growth money. Um, the, uh, The way we financed the deal with Webdam was largely through debt.
Oh, I see. Okay, there's a lot of people using debt very effectively these days. Tell us about how you did that. Did you work with what, Hercules or Timia or SVB?
Yeah, we worked with SVB for a bridge loan and are now basically refinancing that.
Yeah. Sorry, you're what refinanced? Refinancing that bridge loan. That's what you're doing now? Yeah, yeah. Oh, I see. And what, you're going to refinance with a new kind of term loan or you're going to go on a raise equity?
No, on a new loan. We did it with a bridge loan because it's just a lot quicker and then you get more time to sort of figure out the definitive debt situation.
economically though, what would the, how would the terms be different between a bridge and a, and a true terminal? And I mean, obviously the, you know, both of them are fixed interest rate, right?
Typically, the bridge loan is supported by the VC as well. So it's basically convertible.
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Chapter 8: What future acquisitions is Bynder considering?
So you get a year extension on figuring out that loan. But if you can't get it, you basically have to convert equities.
Yeah. There's kind of warrants and covenants and things like that. Yeah. Yeah. Interesting. Okay. Sorry, we got in the weeds there. Let me go back to customer level for a second. I thought it was valuable, by the way. In terms of a churn, obviously churn and retention are critical in a SaaS company. What's your retention today? And how do you figure, you know, how do you drive that higher?
So we're at 103, 104. Net revenue retention? Uh, yeah. Okay. So, uh, sorry, no gross. And that would be about 93, something like that.
Okay. So gross 93 net one or retention.
Yeah.
Yep. And so the people, so two questions there, the, the 93% gross revenue retention, the seven that churn, why do they churn?
Well, that's something, you know, that's a really interesting question. And it's, you know, we obviously track the reasons, but we try to predict sort of what customer base are we having additional churn and try to figure out why. So that's always sort of top of mind. And also looking at the different types of churn.
There's sort of, you know, some customers you outgrow or they outgrow you, or is it really a product problem? Are you losing those customers to others? Or did they change ownership? Or there's a ton of reasons. The ones you really want to worry about is obviously, are my big, you know, are my are the customers with the LCV that you want or the optimal LCV versus CAC, are they happy?
Are they creating more stickiness and expanding rather than part of a cohort that is known for dropping off? And it's usually that there's a higher churn rate in smaller accounts. I think that's across the board in any kind of SaaS company, that's usually the case. So yeah, we try to compare that and use that for predictability.
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