SaaS Interviews with CEOs, Startups, Founders
CookieInformation Hits $2m Bootstrapped For Easy GDPR Copmliance
05 Nov 2020
Chapter 1: What is the revenue model of CookieInformation?
Well, our total ARR is 2 million USD, and we have 1,500 paying clients, so you have to do the math.
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My guest today is Karsten Rendemann. He's a private tech company specialized in developing consent solutions. They help your website comply with current privacy regulations and frameworks at cookieinformation.com. Karsten, you ready to take us to the top? Absolutely. All right. So first off, what does this mean? Are you basically helping people be compliant with GDPR?
Yes, we are in the area of consent to cookies on websites and mobile apps.
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Chapter 2: How did GDPR impact the growth of the company?
Very good. And how do you make money? Is it a pure play SaaS business? Yes, it is. Walk me through that. How much do people pay you per month on average?
The average client pays us about... Sorry, can we do this again?
No, we don't start over. How much do they pay you on average?
Well, our total ARR is 2 million USD and we have 1500 paying clients. So you have to do the math.
You probably gave me better data by just saying the ARR rate. So you're at 2 million in terms of run rate today. Karsten, that's great. When did you launch the company?
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Chapter 3: What challenges did the founder face in acquiring the first customers?
Originally back in 2011, but it was a really, really slow start because there was no GDPR at the time. GDPR only came mid 2018. And that's really where the business took off.
And you said you have 1500 customers.
Yes. And it's a growing at a rate of, of a little more than a hundred percent year on year now.
That's incredible. So exactly a year ago, you were doing a million dollars in revenue. Yes. Is that right? Okay. And how did you get your first 10 customers? Take me through that story.
Oh, that was really difficult. I did some empirical studies at Harvard in 2008, and I realized that if people understood how their personal data was collected and resold from websites and apps, they'd probably visit the internet less.
And if companies knew how their clients' personal data would be collected and resold and used to show ads for their competitors, they would probably be a bit hesitant to invest in websites. So I basically knocked on the largest company's doors for a few years And trying to tell them this and arguing that they should have some sort of a consent solution and avoid that kind of data transfer.
And that was really difficult. So I put myself, I set myself a goal of two new clients each week. And I did that for a few years.
Starting in what year?
2011. 2011. Yes. And at that time it was consultancy and very far from the business model that we have today. So we've pivoted a few times. But the sales reps today still have one of their KPIs is at least two new clients a week, like I did.
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Chapter 4: How much did the founder invest in building the MVP?
Okay, got it. So that means annually they're adding about $180,000 in new ARR, 15K per month. Yep, exactly. And so what will they earn if they hit that quota? Like full base plus commission is typically about what?
We have a system for that. And each sales rep should generate turnover at least two and a half times their salary.
Okay, which means if your quota is $180,000 in ARR, and you want a two and a half ratio between that and what the sales rep makes at full on target earnings, you're paying them full base plus commission of something at like $70,000 to $80,000. Is that right? Yes, that's correct. I see. Okay. And flesh out the team for me. How many folks total on the team today?
Totally. We are 27. And we have about half. Oh, sorry. One third is sales. One third is customer success. And one third is development.
Okay. So about 10 engineers, 10 quota carrying sales reps. Yes. A little less. I think we have eight. Okay. Fair enough. Fair enough. This is great.
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Chapter 5: What is the average customer acquisition cost for CookieInformation?
Now, when did you, you know, the first sales hire is always the toughest. When did you hire your first sales rep? Do you remember?
That was in the summer of 2018. So not too long ago.
And how did you know it was the right time?
We went into 2018 being only two people. And then the crew just started to grow really fast. And that was because the GDPR kicked in in May. And then everything basically went crazy.
So how many people did you finish 2019 with? 2019, we finished with 10 people. 10 people, now you're at 27. And have you grown cookieinformation.com organically or did you raise capital?
No, we have done it completely bootstrapped, no capital. Well, it was completely intentional. Actually, we were looking for capital a year ago, but I think we were too small for the international investors. We were too big for the Danish investors and we were too odd for the remaining. It was really difficult for them to evaluate our tech, whether it was proper tech.
Well, how much were you looking to raise? But we've been lucky enough that the Federal Trade Commission did a study and tried to find out what companies have real tech within this area, and there was only 18. We're one of them. And since then, we have, this spring of this year, been... By the Danish state, we've been evaluated as one of the seven most innovative companies here.
And they have actually given us quite a large grant to expand the company. How much? I cannot tell you. It's in the largest bucket of what they're allowed. What's the range? It is more than $250,000.
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Chapter 6: What strategies did the company use to achieve profitability?
But less than a million?
Yeah.
Yes. And it's a loan or do you have to pay it? Do you have to pay it? It is a grant. Oh, got it.
Got it. No, no paying back.
Okay, that's nice to have. That's almost better. That's almost better than raising equity, right?
Yes, it has been really good for us.
So you launched in 2011. You stay basically a two person agency for six years, seven years, you realize there's an opportunity with GDPR. When do you start selling SaaS?
We started selling SaaS in 2018 on our own platform. So we developed it. I basically pawned everything I had. And then we hired a 10-people development team. And then we built the platform. And then we just got so many companies were contacting us because the GDPR was coming.
Karsten, how much did you spend on those 10 developers to build the MVP before you had your first sale of the SaaS?
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Chapter 7: How does CookieInformation handle customer churn?
I basically pawned everything I owned. I sold my house and moved in the summer cottage. Oh, you're not joking. You're serious. You sold your house. I'm dead serious. Frankly, I had to take out a life policy. The bank asked me to. I was more worth dead than alive. Seriously.
Interesting. So you had to take out a life insurance policy. You sold your home and the bank gave you some money and you put all that into your MVP.
They didn't give me anything. They loaned me. They loaned you. I paid for it.
They loaned you money.
Yes, I did. And frankly, I was very excited the night it went live.
I love it. I love it. Well, you're happy now. Two million bucks in revenue is worth the risk. Yep, absolutely. Are you profitable today or are you burning cash?
No, no, no. We're profitable. And that has really changed over the last year. So it was a big problem for us in the beginning that we spent more in sales and marketing than new customers would generate.
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Chapter 8: What are the future plans for CookieInformation?
But we managed to change that via some very particular focus on KPIs and inbound sales process. So we are positive each month. EBITDA about 50 on average. 50,000 or 50%. 50,000 USD per month. And it's growing at a 100% rate. And we have slightly slighter. Slightly lower, but about half, a little more than half as much in liquidity surplus.
That's great. So each month you're doing about $170,000 in revenue. About 50,000 of it just goes to your bank account as pure profit every month. Yep. And how much is sitting in the bank right now?
We still have to pay off some loans and stuff.
Okay. So you still have loans, but how much cash is currently in your bank?
We have 300,000 USD cash.
And how do you decide whether to keep it in the bank or to pay off some of the loans?
I actually struggled in the beginning to transfer the loans into more longer term loans that sort of reflects the lifespan of the software. So we're very happy that we have five-year commitments on the loans, which we believe match the write-offs.
That's right. Now, obviously, a key part of growing a SaaS company like Cookie Information is making sure your churn is in order. What's your annual churn today?
Annual churn is 4%, and that is stable. So it's been there since we launched.
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