SaaS Interviews with CEOs, Startups, Founders
1580 Why ReviewPro CEO Sold 80% For $28M in 2016 and How He Grew to $15M in ARR Today
21 Nov 2019
Chapter 1: What is ReviewPro and how has it evolved since its founding?
founded in 2008 review pro now works with over 45 000 hotel locations several hundred brands doing about 15 million bucks in run rate or about 1.2 million bucks per month they're growing about 30 percent from 2017 to 2018 so do it doing call call it you know uh Well, a little less than that, obviously, about a year ago.
They've raised less than $5 million to grow this brand and in 2016 sold 80% of it for about $28 million to another firm. RJ is staying on to continue growing the company, obviously incentivized with equity as well. Economics healthy, less than 10% revenue churn per year.
His team of 110 people in Barcelona and remote, again, building up these four modules, probably have some additional ones on the way to continue driving more usage, more adoption, and more value for these hotel brands. Hello, everybody. My guest today is RJ Friedlander. He's an entrepreneur and investor based in Barcelona.
He's the founder and CEO of a company called ReviewPro, the world leader in guest intelligence for the hotel industry. Focusing on hotel tech, the guest experience, or entrepreneurship, he's spoken at more than 100 events worldwide from prominent industry conferences to annual strategy meetings of renowned hotel brands.
An enthusiastic and natural storyteller, his compelling presentations explore the latest trends and technical innovations impacting reputation and enabling savvy hoteliers to gain a competitive advantage. RJ, are you ready to take us to the Absolutely. Thank you. All right. You mentioned renowned hotel brands.
I'm curious, which brand annual strategy meeting did you present at that we would all know?
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Chapter 2: Why did RJ Friedlander sell 80% of ReviewPro for $28 million?
Well, brands like, if you're European based, for those of you that are on this side of the pond, uh, brands like Kempinski, um, Amman resorts, um, large brands like Radisson. So, uh, today we work with 43,000 brands, uh, across, across the globe and from all different segments. For review pro? For review pro.
Absolutely. And just, are those 43,000, those are all paying or are they on like a free plan?
No, those are all paying clients. So we have... Everything is a B2B SaaS product, right? And so we have clients that pay us for our tools. So there are a number of different... We have four different tools. And then we also sell data to destinations. So on the tool side, there's about...
It'd be about 35,000 hotels that pay us a monthly SAS fee for one or all of our, and then we have the balance of 10,000 pay us for our data.
That's interesting. And that data thing really is what more like a one-time productized service every now and then?
No, it would be, for example, like in the UK, the Automobile Association of the UK uses our data. In that case, it's 5,000 hotels as a part of their national star rating system. So no, it would be through our API and ongoing feed where they're using our data as a part of combining that with other data sets.
I see. When you look at your historical revenue over the past 12 months, what percent was based on the data feed versus the 35,000 hotels actually paying you?
everybody's paying us for data. Um, so a hundred percent of our revenue comes from B2B SaaS for data on the tool side. So they're using our data through our, our dashboard and they have access to our analytics and our reports. Um, that would be in terms of, uh, of revenue would be like 95% over 90.
I see. Okay, great. And RJ, I mean, what got you, you know, this is a very fascinating space with the advent of kind of Airbnb, but people still craving hyper curated experiences. What got you into this space in the first place?
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Chapter 3: What is the current revenue growth rate of ReviewPro?
You're scaling up today. What's the team size today? How many people?
Today, we're about 110 people globally. The majority are in our Barcelona headquarters. And then we have people in the U.S., Singapore. and Eastern Europe. That's great.
And then give me, I want to kind of dive into maybe a unique kind of customer story. I'm sure you have, uh, you know, many different customers. You already articulated there's two types, one that's a data play, one that's kind of directly using via your interface. Help me understand though, on average, I mean, what's a customer paying per year for this sort of thing?
Well, again, we have four products. Uh, we have the online reputation. We have surveys, both in-stay and post-stay. Um, then we have, uh, The ability for our clients to assign tasks and basically have a case management system. And that's all wrapped up in a guest messaging hub so they can communicate both pre-stay and during stay. So, again, it depends on what the mix of the product suite is.
But, you know, to give you an idea, this year we'll do over $15 million in revenue.
5-0 or 1-5? One five. One five. Okay, great. So 15 million, if I obviously divide that by 12, that puts you at, I think about 1.2 million per month, right? And then divide 45,000 customers into that. Each one's paying 20, 30 bucks per month. Is that right?
No, the math doesn't really work out that way because the data on a per unit basis is much less. So no, the math isn't.
So what is the 45,000 though? Is that brands or locations of the hotels?
No, that would be individual hotels. So, for example, we work with Radisson globally. That's our largest brand. So Radisson Hotel Group has multiple brands. All of those hotels worldwide use our online reputation, our surveys, our case management.
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Chapter 4: How does ReviewPro maintain a low revenue churn rate?
Are those numbers wrong? Uh, it's, that's pretty close. Pretty close. Okay. And so here's my question to you. It's very, you know, I run a very small private equity firm. And one of the difficult things is once you make somebody rich, it's very hard to retain them. Uh, so why are you still at the company?
Right. Well, first of all, I love the business and I love the team and the product and our clients. And when Shiji acquired us, we had just launched two of our of the products I mentioned. We just launched two. So they acquired us at a point where, you know, I live in Barcelona. So to use football terms, it was it felt like halftime. Right. There was still a lot going on.
There was a lot of work to be done, you know, as a CEO, as a person emotionally and professionally vested in this company. So a lot of the motivation came from that, the fact that there was still a lot to do. Secondly, when Shiji acquired the company or 80% of the company, they gave us, you know, they invested into the balance sheet.
So all of a sudden we had more capital to scale the business than we'd had to get it to that point, right? So we had more resources after being bootstrapped for so long. Thirdly, that 20%, I have a significant part of that 20% and an agreement to stay with them and for them to acquire the rest of the shares over three years. So two years has passed.
Um, we're on path, we're on track to, by the end of next year to more than double the size of the company. So there was a, there was a motive motivation emotionally, lots of work to be done. And then there was also an interesting and motivating, uh, uh, incentive economically to continue growing the business as we've done.
RJ, just to be clear, that 28 million bucks that Shiji paid that, that all went to the balance sheet, meaning none of that was secondary. You took no money off the table.
No, no, not at all. So what happened was our original investors, which were individual investors and some well-known entrepreneurs and then also a small venture capital fund, they, earlier on, they all exited with between a two and a half and a 28 time return. So all of our original investors left the left and they were paid out.
And then there was an additional investment into the balance sheet. So no, the $28 million was not all into the balance sheet. There was secondary plus investment for growth.
Guys, just want to give you a heads up. I will be in Sydney on December 3rd and 4th, speaking at SaaS Talk Australasia, presenting an entirely new dataset focused on companies in Asia, benchmarks of Asia SaaS companies, including obviously Australia,
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Chapter 5: What strategies does ReviewPro use to acquire new customers?
So let's wrap up here with the famous five. Number one, what's your favorite business book?
My favorite business book. Well, one that I just read recently that I enjoyed a lot for the personal side was a shoe dogs. It's a good one.
So I don't know if it's number two, RJ, what's your favorite tool for building your company?
Well, I would say right now.
Wait, let me see.
Let me think about this. Can you, can you ask the question? Give me a thought. Yeah.
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Chapter 6: How does ReviewPro's pricing structure work for its products?
Yeah. What just, what's the, what's your favorite tool for building a company? Well, I would say the tool that's most integrated in our business is Salesforce. Okay. Number three, name an under-the-radar CEO that you're following or studying.
An under-the-radar CEO. I should ask for these questions ahead of time.
I'm trying to think. Just not Jeff Bezos or Elon Musk. Someone you meet with in Barcelona because they're another CEO you respect.
Yeah. So, I mean, for me, Glenn, the CEO of you know, such a huge company and ability to innovate and keep growing at such huge scale. To me, this is, this is definitely a CEO reference for me. You said Glenn Redfin CEO.
No, Glenn is the CEO of booking.com. Oh, booking.com CEO. Got it. All right. Uh, number four, how many hours of sleep do you get every night? Uh, I sleep on average five hours a night. That's crazy low. Um, and what's your situation? Married, single kids, divorced, no kids.
Two kids. I have a 19 year old daughter and a 21 year old son.
That's great. And RJ, how old are you? 53. 53. Last question. What do you wish your 20 year old self knew?
I wish my 20 year old self knew how important the details were back then. Back then I didn't pay much attention to details and just, you know, like most kids my age just sort of paid attention to what, what I wanted to. And what I see is everything, everything is, is in the details. And that's something that I definitely pay more attention to now than I did back then.
Guys, details matter. Founded in 2008 review pro now works with over 45,000 hotel locations, several hundred brands doing about 15 million bucks in run rate or about 1.2 million bucks per month. They're growing about 30% from 2017 to 2018. So do it doing call, call it, you know, uh, Well, a little less than that, obviously, about a year ago.
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