SaaS Interviews with CEOs, Startups, Founders
DropBox Competitor Bootstraps to $9m Revenue in Austin Texas
18 Jun 2021
Chapter 1: What is the background of Madhan and CodeLathe?
Do you think you can break a $10 million run rate this year or do you need more time?
You know, as I said, we are not shattering our numbers, but it's definitely, you know, we owe that, yeah.
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. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hello, everyone. My guest today is Mahan Kanagawa.
He drives CodeLath's overall strategy and execution. Over the last 15 years prior to founding the company, he worked on diverse systems and technology, including building highly scalable MMORPG game server technology, high-speed real-time video acquisition systems, digital video engagement systems, and artificial intelligence. intelligence.
His book, Getting Remote Work Done, is also the original contributor of Money Manager X Open Source Personal Finance Software. And he holds a master's of science degree in engineering from Boston University, now building GetFileCloud.com. And Anur, are you ready to take us to the top?
Yeah, absolutely.
Okay. So you're playing, I mean, this is a very, very hot space. So help us understand, how are you winning deals? What kind of customers are paying you?
Yeah, this is the first question pretty much everybody asks us is how do you differentiate yourself among giants? Box, Dropbox, Microsoft, Google. So the simple answer is we have a very unique differentiation where we provide solutions for specific areas and industries where they need complete data control and privacy.
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Chapter 2: How does CodeLathe differentiate itself from competitors like Dropbox and Google?
That's all, almost all of them are engineers, including myself. So, which helped tremendously. Uh, you know, we do have about, uh, you know, some, we do have like 20% of the engineers in the U S and then the rest of it is, uh, it's all spread across the world. We have people in Europe, South America, um, Asia as well.
How do you find, you know, people listening right now wanting to use outdoor developers, they go, well, how did Madhav find these developers in Europe and Asia? And I mean, how did you find these folks?
Yeah, this has been one of the interesting challenges over time. Unlike many companies, we really wanted to kind of have the relationship directly with people. So we never went out and did outsourcing companies where we go and find an organization or a company that will outsource for us. Because I really believe that you need to have a connection between the company and directly the employee.
So we use different outlets. We have, I think there's a main one, WeWorkRemotely, and there's a whole bunch of other sites. WeWorkRemotely? Yes, that is it. Yeah, that's one. And then there's a few other sites which are very specific, targeted very specifically to remote work. And we use those. Now, have you done all this bootstrap or have you raised capital? It's 100% bootstrap so far.
I love that. So how many co-founders are there? Um, so it's myself and there's another, uh, you know, um, let's see, five, five more people. So there's a total of six people right now.
Oh, that's a lot of co-founders.
How do you guys agree on everything? Um, well, that's not been a problem. We each have our own roles, uh, that we all play. So each one has their own strengths and that's kind of helped us over the years because each of us specialize in one area and it's not been a problem where you're stepping on other people's stores. We also know each other outside of work, you know, and that helps a lot.
You know, we have friends first and then co-founders next. But that also helps, you know, getting to make sure that everybody's in line.
Madhav, how did you guys have the initial discussions around the equity split? Did you just take 100 divided by 6 so you each got 15% of the business? That's exactly about right. Yeah. Really? Yes. Wow. There was no one that was like, hey, I'm giving up a bigger salary at Microsoft, so I want a little more. Or someone saying, I'm going to work more full time on this than somebody else. I want 20%.
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Chapter 3: What is the average customer payment structure for FileCloud?
It's not like I have a philosophical, you know, I'm against getting outside funding.
If you did, if you guys, if all six of you did decide to go raise, how much would you target?
I would say, you know, around 10 million would be a good target. good starting point. You know, that'll get us to do certain things that we want to do over the last, you know, few years we couldn't do so far. So I would say that's a good starting point.
Do you think you could convince your current economics, do you think you could convince an investor to give you 10 million and maybe only take 10% of the company?
Um, I, I would, I would, I think so. I mean, well, let me, let me see. I mean, it depends on where the valuation goes. And I actually, we haven't spent a lot of time trying to, you know, uh, necessarily figure out the valuation and so on and so forth. So that's less of a concern so far. It's not been something that I've spent a lot of time analyzing and seeing that's what would work.
Obviously, we want certain numbers, but you again don't know what the external market looks at from their perspective. So you've got to compare both of that and figure out what is going to be the But again, that's not our primary objective right now. So it's something more of a hypothetical right now. So yeah.
Yeah. Yeah. In terms of scale, though, you mentioned 3,000 customers, right? And a $4,800 average ACB. I mean, that puts you at north of a million dollars a month in revenue, correct? I mean, in the right range.
Well, so it's just starting out at this point where... So 3,000 customers, not necessarily through direct customers. As I said, there are customers who go through our resellers and partners. So when I talk about ACVs, that's going through partners and other resellers as well.
Do you think you can break a $10 million run rate this year or do you need more time?
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Chapter 4: When did CodeLathe pivot to FileCloud and what was the initial revenue?
So 80% is, yeah, that's our approximate number.
80% is retention or churn? Sorry, I meant retention. I was going to say, that would be bad if that was churn.
Yeah, gross is 80%. Net is over 110%. net revenue retention. I always think more about it in terms of revenue retention because it's easier to think about it rather than the other way in churn.
Yeah. So you churn about 20% of your revenue on a gross basis, but that same customer cohort, you expand by 30%. So net net, your net dollar retention is 110%. Exactly. That is right.
Yeah. That's a lot. And the, you know, the reason for the churn is because we actually have a lot of SMBs in our space and SMBs churn a lot more. And especially in last year, 2020 was a brutal year for them.
Madhan, good stuff. Let's wrap up here with the famous five. Number one, favorite business book.
Well, it's not a business book, but it's a book I love. It's called The Manual by Epictetus.
It's a fantastic book for... Number two, is there a CEO you're following or studying?
I like Jason Lemkin from Saucer. Number three, what's your favorite online tool for building FileCloud? Uh, favorite one. Well, I love balsamic mockups. I use it a lot. It's a wireframing tool.
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