SaaS Interviews with CEOs, Startups, Founders
1625 How $31M ARR CEO Profits $500k/mo and Cracked SMB Net Retention of 110%
05 Jan 2020
Chapter 1: How did Odoo transition from services to a SaaS model?
started off as a services company back in 2005, then pivoted in 2010 into a SaaS company, now serving 11,000 customers that paid about 200, 300 bucks per month, doing 2.6 million bucks per month, or about 31 million bucks per year in terms of SaaS run rate, another 9 million on top of that in terms of professional services.
They've done this by just raising 12 million bucks in capital, cashflow positive every month, adding 500,000 bucks and free cash flow to their bank account. 580 people based between Belgium, US, New York City, and other remote locations. 20% revenue churn per year. That's gross. 30% net expansion means he's got about 110% net revenue retention annually, spending 2,400 bucks to get a new customer.
So a 12-month payback period. Hello, everybody. My guest today is Fabian Pinkas. He is the founder and CEO of a company called Udu. Fabian, are you ready to take us to the top? Yes. All right. Open source business apps. Tell us more about what you guys are focused on at Udu.
So we basically do a suite of business apps from CRM, website builder, accounting, manufacturing, inventory. Those are individual businesses, but if you install several, they fully integrate to each other's. We have a SaaS version as well as an on-premise version.
Okay. And if you break down your last 12 months revenue versus SaaS versus on-prem, how much was SaaS?
It's more or less 50-50.
Oh, 50-50.
But I would say that even the on-premise or SaaS, it's just hosted by someone else.
Got it. So both kind of both SaaS model and can you give me a general sense of scale today? What are you doing per month?
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Chapter 2: What strategies contribute to Odoo's 110% net revenue retention?
Okay, sorry, you cut out there. So you're doing 2.6 million per month. Yes, in Mr. And and you and what were you doing exactly a year ago in December of 2017?
In billing for the year, it will be around $44 million.
Sorry, what was your growth rate over the past 12 months?
Growth is 64%.
Okay, 64%. So you were doing about $1.5 million per month exactly a year ago. Something like that, yeah. And then grew that, you said, 64%? Yes. That's great. Very good. Help us understand more about where this growth is coming from. How are you signing up customers?
We do have two channels. One is direct. So on our SaaS platform directly. And we sell with the partners who offer the product on-premise.
Okay. And they both grow at the same speed. What kickback are you paying partners? Is it a 20%, 30%, 50% commission? No.
It ranged from 10 to 20. The smallest have 10 and the largest have 20%.
10 to 20%. Interesting. Okay. And put all this on, before we get too much into the numbers here, put this on a timeline for us. When did you launch the company? What year?
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Chapter 3: What is the current revenue and growth rate of Odoo?
2010. Okay. And so how many customers do you have today?
11,000.
Okay. 11 million would be a lot.
We actually have four millions of users because we do have a lot of free users because of the open source nature of Hadoop.
Yeah. So if I take your 2.6 million you're doing per month today and I divide 11,000 customers into that, that means each customer is paying on average 200 or 300 bucks a month. Is that right? Yes. Yes. Okay. And your current run rate, I can take 2.6 million times 12. You're doing about 31 million in annual run rate right now.
No, we do more because we have non-recurring revenues.
I see. But just recurring, 31 million.
Yes.
Yeah. And the non-recurring, what is that? Installation fees for the on-prem stuff?
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Chapter 4: How does Odoo acquire new customers?
Okay.
And it's decreasing a lot because we changed the business model two years ago. So most of the customers who churn today are the ones who purchase based on the old business model.
Yeah. Okay. So 20% revenue churn. I assume that's gross annually. Do you have any expansion revenue?
Yes, it's 30%. So the net churn is around minus 10.
Got it. Yeah. So 30% net expansion, which means if I take 30% net expansion minus 20% churn, you have 110% net revenue retention.
Yes.
Where's most of the expansion coming from? What are you upselling?
Um, two things, more apps. So they expand in the company. So they would start with a CRM and then they want to use the website or accounting or inventory and the number of users. Usually they start small and put more people on board. Mm-hmm.
One of the things that's remarkable to me, Fabian, about your business model is, I mean, you have apps for email marketing and invoicing and a CRM. But you could say, OK, how do they beat MailChimp on email marketing? How do they beat FreshBooks on invoicing? And how do they beat HubSpot's free CRM on the CRM? Because these are companies built basically exclusively around those things.
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