SaaS Interviews with CEOs, Startups, Founders
3 Systems Cookie Information used to grow to 50 employees and a $50M secondary
22 Oct 2022
Chapter 1: What is the main topic discussed in this episode?
Hey folks, hope your Q3 and Q4 is off to a good start. We just wrapped up Founder 500 in Austin, Texas. Hundreds of bootstrap founders showed up. It was an amazing time. I loved meeting so many of you.
This interview today is a recording from that session, which you're gonna love because now we have visuals, we have the founder teaching, and I made every single speaker include their revenue graphs and real artifacts in their presentations. Without further ado, let's jump in.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool.
Chapter 2: How did the founder bootstrap to a $50 million secondary?
It's like a big Excel sheet for all these podcast interviews. Check it out right now at getlatka.com. Give it up for Karsten. Hi, everybody, and welcome. I was really flattered when Nathan called me and asked if I would come over from Copenhagen, Denmark to make the speech today. And I really wanted to come because, first of all, I really enjoy the community.
And second, I have seen way too many founders here. that never get any money themselves. So I wanted to tell what I wanted to do it differently, how it sort of built up and then how I made a transaction earlier this year. The presentation is called how I bootstrap to 50 mil secondary.
Chapter 3: What challenges did the founder face in achieving product-market fit?
It was a clean secondary, so nothing went into the company. And then the subtitling systems and processes increasing from 1 to 50 full-time employees. We were actually 25 full-time employees when the transaction happened. That was in April. Now we are 50.
It could also have had the subtitle in a state with only 6 million people because we really got to that transaction stage by focusing only on our home state and then getting only in the last few months getting international sales. Or the subtitle could be, and how we became larger than Google Analytics, which apparently, according to the Danish Ministry of Commerce, we are today in our state.
So over the next 20 minutes, I'm going to tell you about sort of the stages it went through. It was a long and a very painful birth. First of all, getting to product market fit, which took me forever.
Chapter 4: How did the founder transition from consultancy to SaaS?
scale, and then how to actually do the secondary. And sort of what's at heart for me is that it was really important, at least for me, to find a niche that I really had a genuine interest in, that I thought, you know, the world needs this. Then make an MVP at an absolute minimum cost because there was no one to finance that but me. And then after that to build a really robust tech stack.
Then I had read the book, you know, Crossing the Chasm, and I never realized what it was until I was there and being really close to bankrupt. Then how complexity exploded. We needed to focus on minimizing friction. by focusing on what we could control and then basically take it from there.
And finally, why I didn't go the VC route and why I still had an urge to sell some shares, even though we're a double hyper growth company that's cash positive and makes profits. So first I wanted to show you sort of a simple graph.
Chapter 5: What strategies did the founder use to reduce churn and increase revenue?
of the metrics that sort of got us into the deal area and i founded the company in 2011 and it was a consultancy company with me and a student since 2016 until 18 where we launched the actual product and i was never able to make to invoice more than 200 000 usd a year as a consultant and i realized i could never
ever scale this company at the same time I was getting super frustrated at the end of 17 the GDPR was coming up finally there was a requirement for consent solutions sorry is the cookie pop up that you're probably being annoyed with on every website that we do And they were just popping up on websites across Europe. And in my opinion, they were all wrong. They just didn't work.
They were not compliant. And I just felt, am I the only person in this world that can see this is basically a scam? It's not working. So I really wanted to just get it right and deliver a solution that works. So we launched in 18 and then you can see sort of got the first 500 clients, spent 19 making sure not going bankrupt.
Chapter 6: How did the company scale its operations effectively?
And then we started to grow. And then once we passed that 5 million ARR threshold, then we were very, it seemed to be very attractive to a number of potential partners because then we had demonstrated that we had stamina and there's a a stable growth that can be sustained. So most of you have probably seen this cartoon before, and I just associate so much with it. I lived that cartoon.
From I first got the idea in 2008, and I thought I was a genius and that the world needed this. And when I look at it today, I just think I was pathetic at the time, like super pathetic. But it sort of grew, and I'll just take you through the stages. So I'll take you back to where it all started.
2008, I was invited to Harvard to do some empirical studies on how personal data is collected from websites and used for commercial purposes without people knowing and without the websites knowing.
Chapter 7: What were the key systems implemented to support growth?
And after doing months of research and presented my findings to the professor and saying, I think the world needs a legal requirement that the transfer of personal data must be consent. You need to inform people first. They need to consent. Otherwise, people will lose confidence in digitalization and they will not use websites and apps. And he thought I was brilliant.
And we're having a glass of water and... I just felt I had an epiphany and he approved and now I would go and make the world a better place. And it just, I was pathetic. It didn't work. No one I talked to believed in it.
Chapter 8: What lessons can be learned from the founder's journey?
People were saying, what on earth is this? No one is interested in it. But I couldn't forget about it. And in 2011, out of frustration, I quit my job. I founded the company and I had one client And they left after a week. I lived in this house, you can see on the left, in one half of it. And I worked from my kitchen table from 2011 to 2016. hardly able to make a living.
Then in 17, I had to sell the house and instead I invested in a chair in a shared office. We were three guys sharing two chairs, but I felt I was getting at it.
and then uh at the end of 17 i decided all right now it's going to be a very different ball game i hired the the loft at this building so i had lots of space i still had no clients really just doing some consulting but now i was ready to business so what i did
In the beginning, I was really focused while doing the consultants, becoming a subject matter expert, realizing, accepting that there's a bigger truth to this whole collection of personal data, how it's used and what value it creates and to whom. I was trying to really tap into it. And then I had to use third-party tech because, frankly, I don't know anything about IT.
I didn't have any interest in contributing to a better world. I was invoicing, you know, free invoices a month, whatever, using Excel. And every year about 60% of my clients, you know, I would have done whatever they asked me to do and they would not come back. Then in 17, I started to build some proprietary software on top.
E-Privacy Directive was kicking in and apparently I was the only one that knew anything about it. So I was hired for a six month gig at the Danish business agency to write the practical implementation order for the E-Privacy Directive, which I did together with the lawyers. So they did the legal part. I did the practical part, which was about third of it.
And that sort of made me really sort of stand out as the subject matter expert in our state. That also meant that I had the opportunity to make a 15-minute documentary with the Danish Broadcasting Corp, which was sent primetime Friday night and sort of really got the privacy subject very public. And... Then I sold my house January 4th of 18.
I thought now we're going to really build a SaaS company. I went to Poland. I hired 10 people. developers and then we started to build it. But I had only funding by myself, so I had to sell my house, I had to sell my boat, I had a small crappy boat, move into a cabin and I only moved out of that this spring. But I've been investing absolutely everything in this company.
So we launched in May 18 together with the GDPR. We had instant product market fit, got 500 clients, and then we started building the tech stack. very early on with some proper systems, Stripe, Zendesk, Pipedrive. And then one new colleague we got, he was able to make a website. I didn't have a website before using Joomla, which no one used, I believe. But that was how we started.
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