SaaS Interviews with CEOs, Startups, Founders
1644 How He Hit Cash Flow Positive, 35 Customers, and $2M in ARR
24 Jan 2020
Chapter 1: How did Maarten start Limecraft and what inspired him?
came out of the broadcasting rooms in these big media companies and said, you know what, if they're going to be spending a million bucks on custom solutions for managing all these media files, I'm going to build it ourselves. That's what he did. He left the company.
Now he's building a company doing about 175 grand per month at 35 customers paying about, you know, anywhere between five and 10 grand per month founded in 2010. Now a team of about 14 people in Belgium raised 1.1 million bucks to do it. Cashflow positive a little over a year ago, three X-ing year over year. They're not measuring churn.
It's, you know, it's small to the point where it's not something they're focused on. However, they're looking at scaling over the next six to 12 months and then deciding at the end of that what they want to do next.
Chapter 2: What unique value does Limecraft offer to media professionals?
Hello, everybody. My guest today is Martin Verwas. He's the founder and CEO of a company called Limecraft dedicated to giving media professionals the best solution possible to manage their digital workflows. Before this.
As a program manager for the R&D department of VRT, which is the Belgian public service broadcaster, he introduced several innovative technologies in the business, including AI for computer-assisted manufacturing and automatic indexing of audio-visual media. Martin, are you ready to take us to the top? Yeah, sure. All right. What is LimeCraft and how do you guys make money?
What's your revenue model?
LimeCraft is an online cloud-based platform for... producers of audio-visual material, television, film, the high-end stuff. It's an online platform because it's a world of more and more freelancers and co-producers, and traditional software can't cope with such flexibility. So admitted, when we incorporated LimeCraft in 2010, it was still a bit early.
Our customers were a bit afraid to delegate the management of their assets to a third party, but by now we're really overwhelmed by some of the largest brands out there that are looking for an online solution to manage their digital workflow.
And we basically, software as a service, so we charge per user and per hour of video, which makes it for them very easy to scale up additional services and wind down some of their use if necessary. Do you have a bunch of churn? we've lost one customer to date.
Well, what about downgrades? You just said it makes it easy for them to upgrade or downgrade. So even if you didn't lose a customer, they could still downgrade.
Yeah, that's true. An independent producer might, at a given moment, might be running six, seven shows in parallel in production and post-production, so the editing. And then they go into selling and visiting, attending film festivals. So it's a cyclic movement.
And it is absolutely, we see some customers going up to very large volumes and then six months later throttling down the volume use, but that's not the real issue. It's a scalable system. We don't care as long as they come back afterwards.
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Chapter 3: How does Limecraft's revenue model work?
Like, how do you know whether to count that or not? You don't know if I'm going to come back or not. How do you manage that?
We actively monitor the production. Or we monitor the user's activity. So it's a bit of a Big Brother type of monitoring activity. But when a producer is paying for 100 seats and not using them properly, they're a churn candidate. Then we just give them a call interactively and ask them what's going on and how we can give them a better service.
Well, maybe, by the way, maybe this isn't a big problem. I mean, what has your revenue turn been over the past year? Is it 5%, 10% or higher?
The revenue turn is literally noise on the signal.
What's the percentage though?
Hard to measure, Nathan. We're tripling our revenue every 12 months now. And it's very hard to measure negative churn.
Yeah, okay, so you have net negative churn.
No, we are tripling the number of users and our revenue to date.
Yeah, Martin, net negative churn means that. It means your expansion revenue is more than outpacing your churn. So it means you're growing. Yeah, correct. So I'm trying to get a sense here of if this is something you're just, it's not something you measure because it's too difficult.
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Chapter 4: What challenges did Limecraft face in its early days?
When did you launch the company? What year?
We incorporated in 2010.
And what were you doing? I mean, were you in film and you quit and said, I'm sick of editing with things all over the place and hard drives. I'm making a cloud solution.
That's an excellent question. I was at the other side of the table, Nelan. I was lead engineer of the research and development department at VertƩ. So I was personally responsible for the digitization of their newsroom, procuring a piece of software that we spent millions in Copics and 18 months in implementation.
And I said to my fellow colleagues, whom co-founded the company, hey guys, if they give us just a fraction of that cost, we build it from scratch. And that's because the world of media production has been completely disrupted and has fundamentally changed And our customers that sometimes still try to tackle it with software that has been designed 20 years ago to manage a tape archive,
That's not suitable for a file-based workflow.
Yeah, I know. Martin, by the way, you don't have to sell me on the product. I get it. I totally understand why there's a need for this. Let me ask a few other questions here. So you mentioned different size clients. Give me a general sense here. I mean, are we talking, actually, you mentioned that your past company, they put a million bucks into this thing, doing it themselves.
Customers paying you today, on average, what are they paying per year? Are we talking like a grand or a million or a hundred grand? What size usually?
Between 10 and 20,000 monthly.
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Chapter 5: How is Limecraft scaling its customer base and revenue?
And more and more corporate... Is Netflix a customer? No, not yet. Come on, Martin. I'd love to have them as a customer. Amazon Studios is a customer.
Okay, that's good. Very good. And how many customers have you scaled to today, total?
In total, I think 30, 35 worth mentioning.
35, you said?
Yeah.
Bigger ones. We have a whole cohort of really small producers, including video and podcast producers. They're there. The system is scalable to smaller numbers as well, but we can't count them as individual customers like the bigger ones.
Okay, so you have about 35 meaningful customers. You said earlier, kind of from a price point perspective, 10 to 20 grand a month. If we stay conservative there at 10 grand a month, 10 grand times 35, it'd mean you're north of $350,000 per month at this point in terms of revenue. Is that accurate? No, yeah, half of it, half of it. Okay, and why is that? It's a lower price point or what?
No, because some of them are ramping up in the first six months They will be gearing up one production team after the other one. It's a volume-based pricing. So in the first couple of months, overall price point will be lower. Okay, got it.
So you're doing $175,000 a month today. You're 3X-ing year over year. So a year ago, you were doing what, about $60,000 a month, something like that?
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Chapter 6: What strategies does Limecraft use to manage customer churn?
14. And where's everyone based? Ghent, all in Belgium. Belgium. Very good. And, uh, and, uh, obviously you raised 1.1 million a long time ago. Are you guys, are you cashflow positive today or are you still burning? Nope. We're cashflow positive since, uh, six months. Congratulations. Any plans to raise capital right now?
No, not at all.
You like the bootstrap light. You like, like no more, no more investors.
We took becoming cash flow positive as an important challenge. This is eventually where a company wants to, that's the objective the company wants to achieve, despite anything which goes in interest. This is what we achieved. We now have sufficient funds over which we will invest back in the company.
That's great.
So our shareholders now think that it's key to grow the company organically for another six to 12 months. And then we'll see what happens.
Very good, Martin. Let's wrap up here with the famous five. Number one, what's your favorite business book? Good strategy, bad strategy. Number two, is there a CEO you're following or studying? No. Number three, what's your favorite online tool? It's probably Slack. Number four, how many hours of sleep do you get every night? Between four and five. Four. Martin, that's nothing. I know. All right.
And what's your situation? Married, single, kids? Divorced. Divorced? Okay. Any kids? Two kids. Okay, yeah. You got a full plate then. And how old are you? Sorry? How old are you? I'm 45. 45. Last question. What do you wish your 20-year-old self knew?
Say it again?
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Chapter 7: How does Limecraft measure its growth and performance?
Now he's building a company doing about 175 grand per month, 35 customers paying about, you know, anywhere between five and 10 grand per month. Founded in 2010. Now a team of about 14 people in Belgium raised 1.1 million bucks to do it. Cashflow positive a little over a year ago. 3Xing year over year. They're not measuring churn.
It's, you know, it's small to the point where it's not something they're focused on. However, they're looking at scaling over the next six to 12 months and then deciding at the end of that what they want to do next. Martin, thank you for taking us to the top.
Chapter 8: What future plans does Limecraft have for growth and development?
Thanks a lot, Nathan.