SaaS Interviews with CEOs, Startups, Founders
1671 Why He's Planning to Raise $500k When He's Profitable, 10% EBITDA Margin
20 Feb 2020
Chapter 1: What is the main topic discussed in this episode?
a solution to help brands, especially retailers, become more profitable. 75 customers right now doing about 100 grand per month in revenue. That's up from 70 grand a month just about a year ago. So nice growth. They are bootstrapped. Their EBITDA margin is about 10%, so they're profitable, about 10 grand to the bottom line every single month.
45 folks on the team, remote locations, 5% revenue churn per year, but net revenue retention higher than 100%. Spending about 12 grand to get a new customer. Payback is very quick because of big setup fees. Hello, everyone. My guest today is Ravi Srinivasan.
Chapter 2: What is the significance of the company's EBITDA margin?
He is the CEO and founder of a company called Groupfeo, a retail guru that has helped many retailers achieve a 360-degree view of the customer and omnichannel world. He's a specialist in leveraging data and analytics to increase profitable sales. He also implements strategies and tactics to compete with Amazon on an online marketplaces. Ravi, are you ready to take us to the top? Absolutely.
All right. What does your company do and how do you make money? Is it a pure play SaaS company?
Yeah, we're a SaaS-based company. We make money by giving customers an increased value proposition. So we use all our data analytics and give them an advanced view of targeting customers in order to increase sales. And they love to do business with us because we give them a methodology to increase profitable sales.
Okay, and help me understand, when they start paying you, what are they actually getting? Is it a piece of tech? Do you sit on their platform? Is it a JavaScript code, price optimization?
They actually have an entire Java application.
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Chapter 3: How does the guest's company help retailers increase profitability?
It's an application that allows 360 Commerce to work with the point of sale. with the E commerce and any of the other environments that they might have, including social media. So it is a full platform for all customer interaction to be recorded and managed inside the application.
And what do people and companies pay on average to get access to this?
It depends on the size of the business.
Yeah, but I mean, that's why on average, by the way, just because we're short on time.
Sure. On average, it's between $3,000 and $5,000 a month, depending on the size of the retailer.
Okay, interesting. And they're all retailers, all your customers?
They're all retailers and distributors. There are some CPG, but not many.
Okay, and walk me through the timeline here. When did you launch the company? What year?
I launched the company in 2010. So we've been in business for eight years. Congratulations. Thank you. And we are now in U.S.
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Chapter 4: What are the customer acquisition costs for the company?
What's your revenue churn annually today?
The revenue churn?
Yeah.
The revenue churn right now is about 5%. Per month? Because we do maintain, you know, we do a couple months a year. We do maintain very significant customers that stay the course. Usually when we get somebody, we keep them for about five to eight years at least. Now, we've only been in business for eight years, so there are customers we've got and we've never lost.
That's great.
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Chapter 5: How does the company plan to use the funds from raising capital?
So you keep them for, call it 60 months or five years, something like that. What are you willing to spend to get a new customer that pays you three grand a month?
Um, first of all, that's about a six to eight month sales cycle. So it would easily cost us between 10, 10,000 to 12,000 to gain a customer.
Okay.
But then they come with a big implementation as well. So we make it up in the very first implementation.
You mean there's a big setup fee?
There's a setup fee.
What does that look like? So if I sign up for three grand a month, what's my setup fee?
Probably your setup fee is going to be anywhere from 70 to a hundred thousand dollars because it depends on how complex you want it because they have to integrate the point of sale, which integrates not social media, e-commerce, a lot of integrations to be done, and also setting up and transferring data from the legacy systems.
Interesting. Okay, so healthy payback. And then when you look at your net revenue retention, so everyone who signed up exactly a year ago, you lose 5% of the revenue. Does that same customer base expand by at least 5% so your net revenue retention is above 100?
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