SaaS Interviews with CEOs, Startups, Founders
1586 How He Built a $30M ARR Company With Just $1M Raised in PaaS Space
27 Nov 2019
Chapter 1: What inspired Jan to found Servoy and what problem does it solve?
2001, Servoy founded again by Jan here. Now the team is 100 people. Again, ushering in really platform as a service. Probably actually a little early to market now. They're really hitting their stride with over $30 million. And AR on just a million raised. I love the efficiency there. Over 1,000 customers today growing 30% year over year.
Chapter 2: How has Servoy achieved $30 million in ARR with just $1 million raised?
Less than 3% revenue churn annually and net revenue retention north of 100%. The economics are also healthy. $1 in, in terms of CAC, gets you a dollar of new ACV. So their payback period, less than 12 months. Again, 100 people based in remote locations as they look to scale and potentially raise middle of 2019. Hello, everyone. My guest today is Jan Elman.
He's an entrepreneur and the founder of Servoy. He's got an engineering background with experience in building great software companies. He's now competing in the low-code platform as a service space. Jan, are you ready to take us to the top? Yes, I am. All right. Let's talk about Servoy. What's the company doing? How do you make money?
So I started Servoy 17 years ago based on the fact that I saw that developing business applications was way too difficult and taking way too much time. And so what we're doing today, we created a platform that makes it three to five times quicker, create business applications, both for internal corporate users and for ISV.
So independent software vendors that create standard off the shelf software.
Okay.
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Chapter 3: What is the customer acquisition cost and how does it impact growth?
And you're a platform as a service, usually platform as a service you've built, you know, by some degree of kind of data usage or utility, is it, is it kind of recurring revenue?
Yes. Uh, I would say 80% of our revenue today is, uh, is recurring.
That's great. And what do you price around? What data metrics?
So we price around usage of the platform. So typically with corporate users, that can be on a per user basis. With software companies, we typically charge as a percentage of what they charge for their products. So let's pretend you're a software product and you charge $10 per user, then our cost would be a fraction, obviously a very small fraction of that cost.
And it makes it very easy for software companies to get started. You're not investing tens of thousands of dollars to begin with a platform, but you can begin at a very low cost. And you're immediately seeing results by using the product versus building everything by yourself from scratch.
So Jan, let me ask you a question. I'm sure you service a wide range of customers, but if I asked you to give me an average, what would you say the average customer pays to use your tool per month or per year?
That varies because we serve two distinctly different groups. So on the one hand, corporate clients. So for example, here in Los Angeles, we have UCLA as a customer. Within the hospital, they build custom software applications using Servoy.
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Chapter 4: What strategies contribute to Servoy's low churn rate?
This is typically done at the departmental level. So you only have maybe 10, 20, 30 users. There are also corporate clients that use Servoy site-wide. So they use it for all of their software development. Then you're looking at thousands of users.
if you look at software companies then because they're paying a percentage that can also vary depending on their own size usually in reality it's around two percent of their total revenue so let's say as a software company you're you're building 200 000 a month then your cost to serve will probably be four to five thousand so typically very much in the realm of what you'll be paying to your infrastructure company typically but now you get a full stack so full development
testing, deployment, integration, and rapid application development tools.
So Jan, would you say kind of that five grand per month price point, that's a fair representation of kind of your minimum, would you say, or is that closer to an average?
I would say that it's on the low end of our average. If you look at ISVs, it's sort of on our average when I look at corporate lines.
I see. Very good. Okay. So I want to put this on a timeline now. You said you found, I want to make sure I heard this right. You said you found the company 17 years ago. That's right, yes. You were ahead of your time.
Yes, we were probably too early. So the first years we had a pretty tough time in selling this. How tough? And even now, it was very hard. It was finding customers one by one. Marketing was very difficult. And that has gotten much better in the past years, where now the gardeners and the foresters have defined low-code as its own separate market.
Although we feel that we are a bit in the middle, so we're not entirely in the low-code space. Because while low-code is great, it's not very capable of building complex business applications. It's usually only used for very small point applications. Our platform is typically used for broader applications.
On the high end, you would use tools like Java and .NET, with which you can basically build anything, but you need a very high budget. You need a lot of people to throw at the problem. We nicely fit in the middle. So this used to be the 4GL space. So back in the days, you had all these great 4GLs that you would use to build business applications. And we live there.
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Chapter 5: How does Servoy's pricing model work for different customer types?
to do an additional funding round. And we believe that with an additional funding round, we could put the growth rate back to 100% year over year.
And can you give me a sense, Jenna, in terms of generally speaking, what your ARR is at today?
Well, as a privately held company, we don't publish our ARR other than just the metrics of how we're growing and the number of customers that we have.
Well, something I'm doing here is wrong because if I take the thousand, unless you're going to totally surprise me here, a thousand customers times that 5,000 price point, which you said is on the low end of your average. If I multiply those together, that puts you at 5 million bucks a month. Now, maybe you are at 5 million bucks a month, but I'm assuming I'm doing some math wrong.
Yes, because the the corporate clients are a little bit lower. But yeah, we have that we have a healthy revenue within a company where we've been profitable since 15 years as an organization.
Well, congrats.
One of the reasons.
Yeah, thank you. It's that and it sounds like your bootstrap today as well.
Well, we did one funding round in 2008. So this is 10 years ago. And the idea then was in 2008, we will need a lot more funding rounds. But so far, we didn't have to do any.
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Chapter 6: What challenges did Servoy face in its early years and how were they overcome?
But on the other hand, you have to keep in mind we've been doing this 17 years. It's not like we started yesterday with $1 revenue.
I like slow growth. You know what I love, Jan, about what you've built? I love that when I take your ARR and I take your funding and I divide, you have 30 times the ARR versus what you've raised. There are very few companies that are funded that you can say that about.
Right.
So I think it's impressive. I think it's great.
Okay, thank you.
Not that my opinion matters, but I think it's impressive. All right, let's wrap up here, Jan, with the famous five. Number one, what's your favorite business book?
Well, that's a good question. I haven't made a list actually in quite some time. What's the last one you read? The last one I read is How to Fill at Nearly Everything and Still Win Big. by Scott Adams. And some don't consider it a business book, but a comic book.
He's hysterical, though. He's a great writer.
Yeah, and he's very good in putting out how you should anticipate failure and enjoy it so that you can truly learn from it. And I think in the technology world, although we often say it, embrace or fail fast and all those kind of buzzwords, We still have a big fear of really doing it and really admitting I was wrong at these 10 things and I've learned something from it.
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